Another way of alleviating poverty is by subsidizing services.
Remember, we said that, sort of in the back of our mind,
the way we want to define poverty, is we want to make sure that people
are not poor when they have enough income to buy the food,
and the clothing, and the shelter, and the other services that they need.
Well, maybe one way of making them not poor is rather than giving them money,
giving them some free services.
And indeed here in the United States we do give some free services,
for example, education in the United States is free up to the age of 18.
So that is a subsidized, in this case completely subsidized, service.
Another service that's given for free is health care.
So here in the United States we have a very, very convoluted and
complicated health care system where most people have to buy their
insurance either privately or through the work place.
But we do give free healthcare for those over 65 through a system called Medicare
and we also give healthcare to those very poor to a system called Medicaid and
we actually also give it to children to a program called S chip or
run to the States, not all children but children who are poor or close to poverty.
Piece of these are examples, again, of subsidized services that are there
to help people not be poor despite the fact that their income is low.
So I've mentioned here that here in
the United States we have a progressive income tax.
The federal income tax system is built in such a way
that the average tax rate rises with income.