[YT="It bears repeating from time to time..."]P36x8rTb3jI[/YT] And in the same vein: [YT="We're not rich like y'all, but this year we will be..."]dLsNOEt0EX8&feature=related[/YT]
I clutch my head trying to understand the original post. For someone who took first year accounting, macro and micro econ, I still can't understand marginal tax rate. Wikipedia does nothing!
Funny, that doesn't appear in the article, nor is any part of the article the slightest bit dependent on the Austrian Business Cycle Theory. It's strictly a numerical analysis. Your unwarranted out-of-hand dismissal makes you appear quite ridiculous in this.
The article was posted from a blog that purports to "advancing the scholarship of liberty in the tradition of the Austrian School." This is of course, an ad hominem, but I don't care. I could argue that welfare programs shouldn't be (and for the most part aren't) designed to be a public dole, but it doesn't always work out that way and you're arguing that they shouldn't be available at all for ideological reasons. I mean, this is a diatribe against government programs. Poor people shouldn't go to school as easily as the wealthy, and the elderly should be be counting down their last days, as they wither away in a bed. The only reasonable point is that the proposed changes to the tax-rates will negatively affect working families.
No one except O2C understands this! Basically, what it's saying is the way the tax system is set up, unless you make over $40k, you may as well sit on your ass and collect govt. handouts, because you're not going to be much better than the fellow who does. (At least I THINK that's what it says.) As for figuring out the math behind it, I can think of better things to do at 2:30am.
That's roughly what it says, and it's not a flawed premise. I can see where the author is going with this though, and throwing the baby out with the bathwater isn't the answer.
Marginal tax rate is the tax rate you pay on the next dollar of income you earn, determined by how many dollars you've earned so far. So your 50,000th dollar is taxed differently (at, IIRC, 25%) than your 400,000th (at 35%). So the former dollar is taxed 25¢, the latter is taxed 35¢. Implicit marginal tax rate is the marginal tax rate, taking into account the various subsidies and credits that phase in and out at particular income levels. An implicit marginal tax rate of more than 100% means that you will be genuinely worse off getting a job that pays $1 more than your current job, over the range of income at which the marginal tax rate is 100% or more. This is most of the range of what looks like about $24,000-$43,000 - that is, the example family above is actually WORSE OFF with the parent making $42,000 than making $25,000, once welfare, subsidies, and tax credits are tax credits are taken into account. Now look, I understand the left-liberal desire to have a safety net, but can we please at least get one that doesn't entangle the people its supposed to save so they can't get out unless they do so all at once? One that doesn't keep people in it in perpetuity if they can't nearly double their salary overnight?
We make less than that and I think we are better off. Maybe not financially, but Zel's self-respect is just as important, IMO. Pride in a job well done and a sense of satisfaction. I imagine our HMO is significantly better than any Gubmint program and a 401K with at least something being set aside for later. Zel is now in the position that if there is another layoff in the electric shop, he'll get nailed. He's Fourth from the cut-off. He is looking into moving over to the design section via inter-company loan as they are desperate for help over there to learn some new skills and hopefully impress the people over there so if he is layed off they might offer to hire him into that trade in the company. If nothing else he will learn AutoCAD and get some nice experience for his resume if they take him. Hardships are often motivators...they inspire people to do and try things they might normally not bother to and rock the boat. I think really long term programs often provide the cushion some folks need to turn them into the person who won't do anything to risk losing those guaranteed benefits from the government in return for employment that might be difficult, could be lost and places responsibility on the person themselves. It's scary and some people can't see the potential because of their fears.
Accepting for argument's sake that the anti-poverty programs give people who would earn less than $40k a disincentive to work, this would matter mainly if a) the people to whom it applied did/or knew about this analysis, which seems to have perplexed various well-educated people here and b) they were strictly or primarily motivated by the numbers. I don't think either of these things are likely true. I don't think too many people who are making under $40k a year for a big family are plotting out their marginal tax rates and figuring out how much they might make if they work vs. if they participate in government programs. And I think that a lot of people on government assistance would rather work for a living than not, even if it were shown to them government assistance was strictly better economically. They have their pride and self-image just like everyone else.
I actually agree. My parents were on welfare for a while when I was little, and one thing they worried about was my father making too much money from his low paying part time job. First, because if you made too much money they'd deduct it from your welfare cheque, leaving you no better off than when you started, but also because making too much money would mean welfare would stop covering their prescriptions, which would have otherwise cost them a couple hundred dollars a month. I support the idea of some sort of social safety net in principle, but there needs to be a better way to help people get off it once they're able.
Accepting these figures for the moment, one problem is that if benefits are cut to provide incentives to work, wages at the lower end of the spectrum will fall as well. Rince and repeat. Enjoy the race to the bottom.
This thread seems to be all about safety net, i.e. does it eventually do more harm than good? From the analysis above, it looks like the government kicks out the safety net just as an individual is about to get back on their feet. I'd venture to guess that both sides of the political aisle feel this shouldn't be happening and is not the best way to go. (Though I myself feel you should be responsible for your own safety net.)
So it's better to pay people to do nothing, than to pay them slightly less to do something? No wonder communism died a well deserved death. Too bad the idiot political necromancers in Washington don't remember the past well,
People on welfare are aware that they will lose their benefits if they earn money. How motivated would you be to work if you would receive less money than not working? It can. A safety net is supposed to prevent you from being destroyed by economic forces beyond your control; for many, it turns into a way of life. Much like people who have been in prison, people who have been on welfare for many years have extreme difficulty re-entering regular life. The Democrats want people to be dependent on government; it's the entire basis of their power. How many welfare recipients do you imagine vote for the Republicans? Someone who has no sense of shame at living on the public dole would certainly think so. I'm not sure they aren't fully aware of this. Political power--spelled 'numbers'--is more important than good governance or a healthy state.
I take it Order2Chaos is an economist, or financial analyst, or something like that? Very complicated. Argues for a flat tax and a "safety net" that's more about getting people re-trained for a good job than giving them hand-outs. Maybe "welfare" should incorporate some kind of vocational training and job placement service? With a cut-off date for benefits?
The taxpayers would still come out too far behind. Just make them labor at some menial task until they find something better. Did ditches, landscape public grounds, scrub courthouse toilets, etc.
I didn't argue that it was better - that's a different thread - I argued that this situation or one like it will always apply to some extent if you have any safety net. So if you don't like it, the only fully honest solution is to remove that safety net entirely, and accept the severe impact on the living standards of the poor - both those who work and those who don't.
I think your first statement is false in the wake of welfare reform as I understand it, which requires people to find work. I also believe it is false in terms of what people on welfare might be aware of. This is not as cut-and-dried a question as you might think. I bet you and some of the libertarian Randian types would as a matter of principle prefer to work for little or no money than to receive more in government money. There's more at work than just dollars. There's also ego, community standing, morality and so forth. That's why lots of people work low-paying but fulfilling jobs. That's why some people don't break the law in the hopes of getting arrested and get free government housing and meals without doing anything. Also, people may have a broader vision than you're giving them credit for. Even taking for granted that someone is making less money now by working than by accepting various forms of government assistance, that person might think doing so makes more sense because they stand the possibility of making more money later through their work. Quite a few, actually, depending on how you define "welfare." It's not like there aren't welfare recipients in rural settings or who don't vote for Republicans for any number of reasons that are non-economic (the party's stance on gays, armed forces, abortion, etc). I would imagine there are plenty of people who are receiving government assistance in some form or another who are similar to Nova or Dayton in their beliefs.
That was pretty much the experience I remember growing up. I don't advocate welfare as a substitute for working for this very reason, plus the fact that once the last kid turns eighteen, you are royally FUCKED. I know T'Bonz has also mentioned something about the welfare system penalizing married couples, that get significantly less money if they're married than if the mother is single, to the point that the mother is better off staying unmarried and raising the kid alone. Federal job training, help with transportation, and most of all, people to tell them this stuff's out there, if people are willing to look. Plus, you'd also need some support system to help you get out of there. All the acknowledgment in the world about Oakland being a shitty place to raise a kid wouldn't have helped my family if we didn't have relatives that helped us finance a move away from there. No way is that remotely possible on welfare.
