Milopost

The way i think about it is that it's far too complex to break it down into:
- Give money to people who really need it
or
- Give money to people who dont necessarily need it, but have earned it

I guess, for example:
If the gov't gave out a tax break to say, a generic large company, that company could then have the available to funds for capital investment. Following an investment for expansion, or for extra plant or equipment, the company could then employ say, an extra 100 previously unemployed citizens, possibly sustaining these new workers onto positive paths of 'improvment' (word used for lack of a better at the present mo). Further, the tax break used for investment would create demand in associated industries, such as building and machine producing companies which supplied our original generic company.

The possible alternative would be to fund welfare for these 100 unemployed citizens. And say after 3 months or so, when the cost to the gov't equals what was paid out in the tax break, you might have 5 or so citizens (5%), who may have broken out of the poverty cycle.


So, the nice and simple answer of just giving money to people who really need it becomes not as clear cut. You could be better helping those people by ensuring that the money goes into investment in businesses. It's clear that a gov't in a market economy would prefer the first option, and i think that is why the gov't gives tax breaks for certain reasons (eg. research and development. I'm not an American so I don't know the exact motives or details of the American gov't's tax laws, but i think it should be similar to Australia's).

However, it should be noted that even success in the first option is dependent on the successful workings of the mechanisms of the market economy.
I guess you might have to ask yourself: "Do you trust capitalism?"