Safety Net System

Safety Net System

Every country in the western world has some type of safety net system to help the poor. In creating such laws it is necessary to define who the poor are. In an effort to obtain the money in such plans, what type of substitutions do you think will be made some individuals if the poor are defined as individuals with an income less than $ 13,000, single parents, and blind people?

Many countries have adopted strategies and policies that help the poor in the country in order to reduce the level of inequality in the economy, these efforts are also aimed at improving the welfare of the poor by reducing the burden of tax and other government revenues.

If the individuals in an economy with less than $13000 income level are termed as the poor then the government will help the poor by zero rating their income taxes on this individuals, the policy measure here will be to use progressive taxes which will tax high levels of tax to high income earners and less to low income earners, therefore in this case the government could remove the income taxes they impose on income levels equal to or less than 13,000.

The other way in which the policy makers will help the poor is through the introduction of allowances, persons with disabilities or with large families should get high levels of allowance, these allowances should include family allowances, disability allowance and difficult allowances also house allowances. These allowances will help reduce the levels of inequality in the society and at the same time aid the poor to improve their welfare

Safety Net System

The other way in which the government could aid the poor is through government spending, in most countries the poor live in particular areas and the government could improve their welfare through an increase in spending on these areas to improve the inequality levels.

In conclusion we can finally say that the government has tools that it uses to ensure that the welfare of the poor is improved, this will be the use progressive taxes in the collection of income taxes, those earning less than the 13,000 dollar income level will not be taxed, the other way is to provide allowances to those who are poor and also to those with disabilities, this allowances should include house allowances, disability allowances and family allowances.

References:

Brian Snow (1997) Macroeconomics: Introduction to Macroeconomics, McGraw Hill Press, New York

Philip Hardwick (2004) Introduction to Modern Economics, Pearson Education Press, UK