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I read an article "A breakdown of the fiscal and monetary responses to the pandemic" and noticed most direct cash payments depended on each person's income, unemployment, or dependent family members, but not on their asset size. Correct me if I'm wrong, but if I understood correctly, rich people without any income can also get the benefits. This is also the case in South Korea.
I'm sure there are some reasonable reasons behind this, but what would it be?
In Logic, there are recognized two types of error:
No matter how well you think you've designed your policy or program, reality will laugh in your face and show you a whole menu of unintended consequences and mistakes. So when designing policy, it is important to control which kind of error you commit, because the consequences of policy errors can often be quite severe. The extreme example being criminal justice. In the United States, defendants are presumed innocent until proven - beyond the shadow of a reasonable doubt - guilty as determined by a unanimous decision of 12 of their fellow citizens. This is because a Type 1 error could result in the imprisonment - or death - of an innocent person. As a societal value, we would prefer to let a guilty person go (Type 2 error) than execute an innocent.
So when it comes to economic stimulus and relief programs, your options basically boil down to:
Beyond just a matter of 'waste a few dollars' vs. 'ruin someone's life' there's also the numbers involved. The number of rich people is profoundly smaller than the number of poor people. Even if every single wealthy person received money they didn't need, the cost of that error would be tiny compared to the cost of the program. Income testing is super easy because, as other answers have noted, the data is already there, just ask the IRS. But going deeper than that requires auditors and accountants to collect and analyze data - these people don't do this for free, and so these kinds of fact finding are fairly expensive. A $1,000 check to a few thousand rich people is still less expensive than just the payroll costs for the people who would otherwise be able to detect and disqualify those few thousand rich people.
One of the biggest challenges in public policy is learning to live with the fact that a lot of things we find philosophically or socially questionable are simply far less expensive, and therefore actually morally superior choices because we can spend more resources doing other important work, than what we would otherwise prefer.
Perfect is the enemy of good.
Just as putting a tax on wealth means we first must measure it, basing stimulus payments on assets would also mean the same. The US federal government has extensive mechanisms for tracking income, employment status, and number of dependents. The federal government has few mechanisms with regard to tracking wealth; there is no wealth tax in the US.
There's no way to base those federal government stimulus payments on wealth because wealth isn't tracked (and it's rather hard to track).
The goal is to keep the existing cash flows for necessities running, and not shake up the market otherwise, basically putting the economy on pause because it would react in a chaotic way to the disturbance caused by the pandemic.
Generally, assets will be tied up in some non-liquid form like a house, and forcing a sale, especially on short notice, would mean a sale at a loss, to the benefit of investors who have more cash on hand than they currently need, i.e. a net transfer of wealth towards wealthy people.
Giving stimulus checks to wealthy people is, in comparison, a smaller transfer.
There are several reasons that have been mentioned individually but they all tie together in the end.
What I mean by this is you may have a decent amount of money in assets such as your house, car, retirement funds and other such things. However none of those are readily available to be spent for day to day necessities. As an example if you need money to pay housing related expenses and you don't have an income would it make sense to sell your house to cover it? Even if you wanted it would you be able to get a fair value with the circumstances of the time? The problem being while you may have the assets they are not able to translate to cash easily.
As was mentioned the federal government currently does not track individual assets and having to track that would add an immense expense on both the governments. It would not be easy to get the initial tracking done, keep it up to date and ensure it is accurate with no fraud.
The more restrictions you place on the program the more costs there is involved in making sure that the money only goes to those who are entitled. This also goes for how complex the restrictions are and with income that is a relativity simple check. This is also why some of the basic income programs that have been suggested have no limits on who gets them so that the overhead is much lower.
In the end the cost of giving it to richer people who may not need it will need to be weighed against the cost of adding in more restrictions. This is of course not counting people who may get left out with those restrictions but still need the money.
Because the stimulus checks were intended to mitigate the lost income (and not assets) in the first place?
There are few dimensions of being rich or poor and for running your daily life it is the income what is important, not the assets.
What's more, a reasonable asset owner may (and is expected to) insure the important assets. Securing the income is harder.
Of course, people that have assets and not income are in better position than people having neither assets nor income, but they are only marginally better, because:
Denying someone help just because they have assets may be OK for an individual (envy and everything), but much less so for the government.
It will also be a forbidden type of discrimination in a lot of countries, even if this type of discrimination usually works backwards.
p.s. really, it is no different to discriminate based on education.
Speaking from experience, trying to determine what assets a person has is a pretty long and arduous process (a great example would be the Medicaid look-back period, which does just that). I mean, we're talking about having to list all their property, bank accounts, investments, etc. To say that this is a major pain would be an understatement, not to mention you still run the risk that
The more pragmatic approach is income because, in the vast majority of cases, your employer is already reporting your income on a quarterly basis (they collect your income tax and remit it). As such, the government already knows how much money you're making for the most part.
It's also unlikely that someone below the threshold set has a lot of assets anyways. Someone making $50,000 annually might own a car (which isn't really a big asset), but they probably rent their dwelling (if they do own a house, it's unlikely to be an expensive one), have limited savings, and probably very little (if any) retirement or investments.
William Walker and David Hammen have made good answers, but one element critical to the COVID-19 stimulus payments in the US that they leave out is the factor of time.
It was not simply a matter, in this particular case, of the administrative cost of applying an assets test. William is right that this is a factor in the design of policy generally, but it was less important in this case.
David is also right to point out that the US already extensively tracks income, in part because tracking income is easier than tracking assets.
In the case of the COVID-19 payments, what was desired was something that could be paid out within days or weeks of the legislation passing both houses of Congress. There was no time to design any new administrative structure whatsoever, regardless of its cost. The federal government needed to be able to use data it already possessed, at the moment the legislation passed, to begin the process of issuing the payments.
And it possessed such data - the records of the income tax filings from the most recent tax year. The shortest distance between the passing of the legislation and the issuing of the payments possible - even shorter than sending a check to every last citizen - was to base payments on the data the IRS already possessed, especially since for a very large number of citizens that data even included bank account routing information.
You seem to have missed an important point here. If you remember, at the time the stimulus bill passed, the stock market was in the midst of a steep decline, which some expected to become a major crash. The intent of the stimulus was not to be a welfare program (there were unemployment extensions and such for that). It was to get more money in circulation*, and so increase economic activity, in order to avoid that crash. That had to be done quickly if it was to have a chance of having the desired effect.
Thus the "reasonable reason" should be obvious. The IRS already had all the necessary data to pay based on income in their income tax files. All that needed to be done was to set up a database query, and send the money. A good programmer familiar with the system could probably do that in a day. Even the government managed to do it in under three weeks: the bill for the first stimulus was signed into law on March 27th, and the first payments were sent April 15th.
Now suppose instead that they had had to set up a bureaucracy to locate and verify assets. They'd probably still be working on it. Few people would have gotten money, which would have made the stimulus irrelevant.
Obviously the crash was avoided. Those more interested in economic theory can argue about whether, or to what extent, the stimulus program was responsible.
*Indeed, I think it's arguable that in order to work as a stimulus, it's more effective to give it to people who don't actually need the money. Those who do need it will simply spend it on the same old food & shelter, while a significant portion of those who don't will rush out to spend it on something they wouldn't ordinarily buy, at least not right away.
Personally I think it is indeed strange/unfair not to take assets into account with a program like this. However there examples of other government-based welfare which only look to income. In the Netherlands for example access to public housing is only tied to to income, not assets. Also various contributions you have to pay to schools and childcare only look to income. I guess in other countries also various yet existing welfare programs can be found which only look to income.
So maybe the choice to take only a person's income into account for stimulus checks is partly just tradition.
