zlacker

This is a great point, and the obvious answer is the government should provide zero subsidies or welfare programs. Every single program creates moral hazard and deadweight loss. Iterate your question to conclusion, and you will arrive there.

What the government should encourage is charitable donations, and when I say that, I mean the mere act of it. There should be no tax incentive for doing so.

Where children are concerned, if anything, perhaps make the sales tax on child-related services zero, and increase sales tax on luxury goods associated with sink or dink households. At least that methodology provides the opportunity to forgo the penalties.