Skip to content
Subscriber Only
Josh Barro

Means Tests Are Poverty Traps

Poverty traps are yet another economic problem that can be best fixed by containing health-care costs.

I didn't very much like the Wall Street Journal op-ed by George Schulz and his colleagues at the Hoover Institution this Monday, but I did appreciate that it discussed the problem of poverty traps. This is the phenomenon of poor and near-poor people facing very high marginal tax rates due to the fact that they lose government benefits as they earn more income.

This is a real problem that can keep people from climbing out of poverty, and it's also a reason to be wary about a solution that conservatives often propose to reduce the cost of entitlements: means tests.