Judging Social Welfare Policy with the Solving of the Bargaining Problem

Current analysis addresses an apparently critical issue of wealth circulation in the society. We try to play a game with the welfare- related burden of taxation. Thus, the Negotiator No.1 stands up for citizens legal and moral rights to social services. The Negotiator No.2 proceeds from the needs of citizens for the provision of public goods. Quite the opposite, the Player, hereinafter called No.3, gives the private consumption a preference over social services and public goods, i.e., the citizens-taxpayers try to reduce their income taxes to be deposited in the tax pool – a common account of negotiators No.1 and No.2. In fact, the voters-citizens in the role of Player No.3, try to fulfil their expectations about taxes by a threat to acknowledge or to reject the bargaining agreement, e.g. a welfare committee must approve a motion against high taxes by unanimous vote. The government assesses and controls the wealth circulation by poverty line parameter. We provide an evidence for claim that 50% median income is an ideal choice of poverty line within the scope of given terms and conditions.