Means testing in general creates horrible incentives: it means that you get punished for improving your situation, or sometimes even for doing things that seem like they could improve your situation.
The best case is when the “punishment” is proportional to the improvement. Like, when getting each extra $1 of income will reduce the received help by $0.2. The worst case is when people are put into discrete categories, and getting the extra $1 will put you in a different category and thus reduce the help by $100.
Complex rules on the level of accounting are necessary, because in real life the income is mixed with the expenses, for example it may be necessary to spend $50 on travel to get to the job that provides extra $100 income. This imposes extra costs for the sake of legibility, for example if you spend $50 on train, you have train tickets as a proof of your expense, but if a friend offers to take you by his car for $30 instead, you probably have to decline, because you couldn’t produce an acceptable proof of expense. The need to do the complex accounting is also a burden for the poor people.
On the other hand, rich people can hire lawyers, accountants, tax advisors, etc., so it can actually be easier for them to generate evidence of their poverty.
Means testing in general creates horrible incentives: it means that you get punished for improving your situation, or sometimes even for doing things that seem like they could improve your situation.
The best case is when the “punishment” is proportional to the improvement. Like, when getting each extra $1 of income will reduce the received help by $0.2. The worst case is when people are put into discrete categories, and getting the extra $1 will put you in a different category and thus reduce the help by $100.
Complex rules on the level of accounting are necessary, because in real life the income is mixed with the expenses, for example it may be necessary to spend $50 on travel to get to the job that provides extra $100 income. This imposes extra costs for the sake of legibility, for example if you spend $50 on train, you have train tickets as a proof of your expense, but if a friend offers to take you by his car for $30 instead, you probably have to decline, because you couldn’t produce an acceptable proof of expense. The need to do the complex accounting is also a burden for the poor people.
On the other hand, rich people can hire lawyers, accountants, tax advisors, etc., so it can actually be easier for them to generate evidence of their poverty.