Business: The Disincentive Factor

What keeps the welfare rolls long? One answer may be that Government programs and the tax system work to reduce the incentive for the deprived to take jobs, at least in areas where welfare benefits are high. That is the conclusion of an analysis of inner-city family income in Los Angeles by Economist Arthur ("Curve") Laffer, who has popularized the theory that lower tax rates lead to increased business activity and therefore to higher tax revenues.

Laffer found that a family of four in which no one works receives $739.33 a month if it takes advantage of all available welfare benefits and...

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