Suspicious discontinuities (2020) • Hacker News Board

Re: Suspicious discontinuities (2020)

#241

Post by dragonwriter » Thu, Mar 21, 2024, 3:41 PM UTC

armchairhacker wrote: post #52

At least in the government, there should be a law that any hypothetical scenario where someone making more money before government taxes/incentives would cause them to earn less after, must be quickly resolved by replacing hard cutoffs with gradients. No benefits should apply 100% for anyone making under a certain amount and 0% for anyone making over. Instead there should be a range they slowly decrease, so that if y…

> At least in the government, there should be a law that any hypothetical scenario where someone making more money before government taxes/incentives would cause them to earn less after, must be quickly resolved by replacing hard cutoffs with gradients.

Multiple programs, offered by different jurisdictions, with overlapping populations, each with sliding scale benefits that reduce less than $1 of benefit for each $ of income, still can (and do) end up with beneficiaries losing in net with additional income. But instead of doing so at particular cliff points associated with each program, they do so continually over a wide range. You replace a series of cliffs with a slide.

Re: Suspicious discontinuities (2020)

#242

Post by qazwsxedchac » Thu, Mar 21, 2024, 3:41 PM UTC

stephenbez wrote: post #234

qazwsxedchac wrote: post #133

Marginal rate discontinuities in the UK income tax system [0] are driving highly undesirable (from the taxman's point of view) behaviour. The increase in marginal tax rate from £100K p.a. upwards has already led to: - doctors going part-time to keep their income below £100K, in the middle of a shortage of doctors across the health system - employees turning down promotions because with the combined effects of income…

If I understand the linked chart, there are discontinuities in the marginal tax rate, not the effective tax rate. So in that case yeah at certain levels the amount you owe on each additional dollar goes up, but that would not mean that making 105k is worse than 100k unless the marginal tax rate is greater than 100%. This ignores stuff like losing childcare subsidies that is likely not included on the graph. In the us…

> If I understand the linked chart, there are discontinuities in the marginal tax rate, not the effective tax rate.

True, but they are harsh discontinuities, sufficiently so to have the effects I described. And yes, there is a common combination of personal circumstances (high income plus student loan repayments plus child care subsidies) which means that any gross salary between £100K and £117K means less net income than being on £99,999 gross. I've not been able find a graph for that, but the maths checks out.

The result of this particular combination is to effectively impose a ceiling on many employees at £100K gross, because they would have to receive a greater than 17% pay rise to be better off than before.

Re: Suspicious discontinuities (2020)

#243

Post by danaris » Thu, Mar 21, 2024, 4:07 PM UTC

UncleEntity wrote: post #231

danaris wrote: post #100

Earlier quoted context omitted.

That graph is also showing an ideal situation—that is, you fully qualify for and fully receive all of the benefits listed. That means you have to also know that you qualify for them, apply for them, prove that you qualify, oh, nope, whoops, you missed one piece of proof there—that means you have to start all over. You have to apply for each one, prove that you qualify, jump through all the hoops, you start receiving…

In my cab driving days I hauled around a bunch of people to/from medical appointments and they talk on the phone a lot... Some people are absolute experts at navigating the bureaucracy to the point I expect they know the rules better than the people that work at the various government agencies. It was quite impressive to be honest. One example off the top of my head; this lady was talking on the phone with a friend (…

If you've got the mental bandwidth and dedication to learn these kinds of things, it can be very impressive. This is obviously a much less dramatic example, but when my wife worked for a costume wholesaler over a decade ago, she had to learn how customs regulations worked in order to design costumes that would be able to be imported without the higher duty associated with "wearable garments", and by the time she left that job, she knew the regulations better than at least some of the customs agents she had to interact with.

I have great respect for people who can learn to navigate government bureaucracies well enough to avoid getting caught up on all the deliberate snares and thorns—all the moreso if they can do so while also being poor, working 3 jobs, raising kids as a single parent, etc.

Re: Suspicious discontinuities (2020)

#244

Post by philomath_mn » Thu, Mar 21, 2024, 4:07 PM UTC

rhelz wrote: post #140

philomath_mn wrote: post #124

Earlier quoted context omitted.

- Trust fund babies are far more rare than people making ~$50k - Trust fund babies will not qualify for much government assistance It is a net good for the economy and the individual if a person who is capable of making ~$50k does so within the workforce, rather than avoid improving their own life in order to qualify for assistance. This is not a moralization of the use of government assistance, it is a criticism of…

> It is a net good for the economy [for individuals to improve their lives] I agree. If you've just inherited $25 million, it would still be better for you and for society for you to get a job--even a job paying $50k a year if that is all you could get. But...are you going to be incentivized to do so? If you care about somebody not wanting to make $50k because they'd lose a $10k subsidy, how much MORE should you care…

- The government created an incentive structure keeping people on government benefits from being productive members of the economy. It should fix that.

- There is still a question of scale: the trust-fund-baby population is several orders of magnitude smaller than the makes-50k population

> I advocate a 100% inheritance tax

Well then I don't think there is much common ground between us :) A 100% inheritance tax severely dis-incentivizes savings and investment, cutting off capital to the businesses that have created so much value over the last century.

Re: Suspicious discontinuities (2020)

#245

Post by UncleOxidant » Thu, Mar 21, 2024, 4:56 PM UTC

hsjsbeebue wrote: post #196

UncleOxidant wrote: post #64

We had something like this when we were on ACA one year. I hadn't been working that year, but I ended up getting a job in August and it looked like we were going to go over the income threshold because we have a rental and were getting rental income. I asked the renters to please not pay their rent for Sept-December until January of the next year. They happily complied. We were able to squeak under the threshold, but…

I guess you were taxed on cash accounting not accrual?

Didn't receive the income for 4 months of rent until January of the next year. Reported the income in the year it was received. Isn't that generally how it works? (not an accountant or a tax expert)

Re: Suspicious discontinuities (2020)

#246

Post by dragonwriter » Thu, Mar 21, 2024, 5:02 PM UTC

hsjsbeebue wrote: post #196

UncleOxidant wrote: post #64

We had something like this when we were on ACA one year. I hadn't been working that year, but I ended up getting a job in August and it looked like we were going to go over the income threshold because we have a rental and were getting rental income. I asked the renters to please not pay their rent for Sept-December until January of the next year. They happily complied. We were able to squeak under the threshold, but…

I guess you were taxed on cash accounting not accrual?

Individual income taxes in the US are usually cash basis (it is poasible to change to accrual, but from what I understand it almost never makes sense for an individual to do so.)

And only individual income taxes would be directly relevant to individual ACA subsidy eligibility.

Re: Suspicious discontinuities (2020)

#247

Post by Projectiboga » Thu, Mar 21, 2024, 5:05 PM UTC

eru wrote: post #225

AnthonyMouse wrote: post #215

Earlier quoted context omitted.

The cost is fiction because it's a tax credit. The money is on both sides of the ledger. If you're making $60,000/year and your pre-credit taxes go up by $12,000 and then you get a $12,000 tax credit, you have paid an additional zero dollars in taxes. If you don't make much money and the government used to pay you a net $10,000 in benefits and now you get a $12,000 UBI and pay $2000 in taxes, that hasn't actually cos…

> The cost is fiction because it's a tax credit. The money is on both sides of the ledger. If you're making $60,000/year and your pre-credit taxes go up by $12,000 and then you get a $12,000 tax credit, you have paid an additional zero dollars in taxes. Yes, but marginal rates are important, too.

Most people miss that the 'money' will get spent. This should lead to an income multiplier. Then hopefully to a reallocation of resources moving bureaucrats from administrative work to something else.

Re: Suspicious discontinuities (2020)

#248

Post by s_dev » Thu, Mar 21, 2024, 5:14 PM UTC

nominatronic wrote: post #36

A similar fun example is the distribution of Elo ratings on a chess site, e.g. here's the weekly distribution on Lichess for Bullet games (less than 3 minutes): https://lichess.org/stat/rating/distribution/bullet It's easy to understand why this happens: - Player ratings will fluctuate by small amounts as they win and lose individual games. - People are happy to stop playing when their rating is at e.g. 1503, but if…

Or you can look at the cut off date of competitive sports players and athletes. If January 1st is the cut off for age there will be a disproportionate number of players born in December. If it's June 1st many of the players will have birthdates in May and April.

Re: Suspicious discontinuities (2020)

#249

Post by advael » Thu, Mar 21, 2024, 5:34 PM UTC

gottorf wrote: post #233

advael wrote: post #214

Earlier quoted context omitted.

This is nonsensical for numerous reasons 1. The federal government doesn't have tax revenue. It issues a currency and then taxes go toward countering inflation. The notion that a currency-issuing government needs to "balance its budget" in its own currency is a political fiction. Also, policies that benefit people at the lower end of the income spectrum disproportionately actually move money around in the economy, wh…

> you could make considerably more "tax revenue" by funding the IRS The US government expenditure as percentage of GDP is now over one-third, as opposed to the pre-WW1 long-term average in the single digits. Keep in mind that massive infrastructure projects like the Transcontinental Railroad were able to be built in those single-digit percent times, or that US educational spending per pupil has been going up year aft…

I attribute a lot of the higher expenditure and lower efficiency to the continued insistence that outsourcing to contractors, effectively picking winners in a "market" to give monopoly status, is a better way to provide government services. These firms have little if any accountability to the electorate, no incentive to set reasonable prices, get anything done efficiently, and in some cases don't even produce working services

Similarly, bringing a drug to market with a patent is not a competitive marketplace, by design, and it consistently creates an outcome wherein people are charged exorbitant sums of money because of this non-competitive market. Doing a bunch of government-backed R&D and then getting a patent for it is the government picking a winner, not creating a market

Basically, it seems like the government was and remains a lot more efficient when it directly builds the capacity to provide goods and services it determines to have an interest in providing, rather than try to do this through "the market" (again, this is almost never an actual market)

Re: Suspicious discontinuities (2020)

#250

Post by Projectiboga » Thu, Mar 21, 2024, 5:55 PM UTC

advael wrote: post #214

Aerroon wrote: post #205

Earlier quoted context omitted.

The problem with UBI isn't so much the politics, it's the feasibility of the cost. $12k a year over 300 million people is 80% of the US government's tax revenue. A negative income tax might work out a lot better on the numbers, but it won't help the people that need it the most (the ones that can't get a job). But hey, maybe it can work. The US has a deficit spending of $1.7 trillion in 2023, $1.4 in 2022, $2.7 in 20…

This is nonsensical for numerous reasons 1. The federal government doesn't have tax revenue. It issues a currency and then taxes go toward countering inflation. The notion that a currency-issuing government needs to "balance its budget" in its own currency is a political fiction. Also, policies that benefit people at the lower end of the income spectrum disproportionately actually move money around in the economy, wh…

Actually most of the money is created as debt. Lincoln and JFK both issued 'Green backs', money not created via debt issues. But neither lived too long