This is one of the many reasons that means tested, rather than universal programs end up producing perverse outcomes. People in countries with universal healthcare, daycare and education do not have to limit their participation or productivity in the real economy in order to access essential services.
Suspicious discontinuities (2020)
131–140 of 294 posts
Re: Suspicious discontinuities (2020)
#132Earlier quoted context omitted.
Frankly, because many people think that any kind of welfare or assistance is, at best, a necessary evil—and more often just evil —and they want to make it painful, complicated, and hard to access.
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> some people think they deserve everything they can claim
If they are able to claim something doesn't it stand to reason that we think they deserve it? I am confused how you'd measure your qualification for welfare without using the qualification metrics.
At the end of the day welfare in the US extremely stingy even if you manage to max it out - it can be a struggle to survive in a lot of areas due to a lack of CoL adjustments.
Re: Suspicious discontinuities (2020)
#133Marginal 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 tax, student loan repayments and loss of childcare subsidy the effective marginal rate of income tax between £100K and £117K is > 100% (!)
- single high earners (core voters of the present government) effectively subsidising families of middling earners (the opposition's core voters) because the discontinuities apply to single person's income, not combined household income
The behaviour changes are simple first order effects. The second order effects on public service workforce availability and overall tax take were also highly predictable.
[0] https://www.telegraph.co.uk/multimedia/archive/03270/tax_327...
Re: Suspicious discontinuities (2020)
#134Earlier quoted context omitted.
The main feature of that image is "childcare" which seems to be a fixed subsidy of $16k (and "CHIP", ~$4k related to child health care). I don't know what the former means and how these are calculated, but if you don't have children, this graph would look a lot less exciting.
The ones I've known with kids all seem to have it far worse. If they were getting a $16k tax credit or whatever it must not have been making up for the other costs involved with raising children.
> The ones I've known with kids all seem to have it far worse. If they were getting a $16k tax credit or whatever it must not have been making up for the other costs involved with raising children.
Worse than someone who doesn't have to pay raise a kid isn't the same thing as worse than someone else with kids who makes $8000 more and therefore loses the $16,000 credit.
And the cliffs are only half the problem. Did you get a childcare subsidy? Only if you use approved providers, which charge more than your older niece would to watch the kids, and now the money goes to some bureaucratic corporation with lawyers and lobbyists instead of your own family, and you see your niece less often and don't talk to her dad as much and now he's less likely to offer to do you a favor when you need one or realize that you do.
You also get a housing subsidy, but only for particular housing, which isn't as close to your job or doesn't allow you to pool resources with roommates, so now you have to pay more for transportation or most of the subsidy gets eaten by higher rents etc.
The entire welfare system should be vaporized and replaced with a tax credit for the poor (i.e. a UBI).
Re: Suspicious discontinuities (2020)
#135I went to school at a relatively late age and started in community college. The school/state had a policy where any independent income earners making less than 35,000/year would not pay tuition. A single dollar over that would require paying full tuition of ~$60/unit or about $750 a semester. One year I worked a little more overtime during the holidays than usual and realized with a week to go in the year that I'd go…
I changed career paths post age 40 via a coding bootcamp. Despite being a terrible student when I was younger, I found had a great time learning, and I've really enjoyed my job ever since. I found myself in a strange position though, lots of services offered benefits to students, discounts, internships, storage / compute time etc. I was not enrolled in a traditional university (although they were administering it), a…
>One internship I applied to did not seem to clearly indicate they were only really interested in younger, and more traditional students until the second interview.
Well, you missed out on a lucrative lawsuit there if you're in the US. An interviewer telling someone they're not going to be hired because they're over 40 (or even just because they're not young enough, when they are over 40) is legally equivalent to telling them they're not going to be hired because they're black or Jewish.
Re: Suspicious discontinuities (2020)
#136Coding hard cut-offs like this into legislation, regulation or policies seems crazy almost to the point of negligence, incompetence or malice. Especially when it's so obvious such cliffs will incentivize behavior certain to cause negative or perverse outcomes. It's even more incomprehensible when implementing graduated thresholds is so well understood. A related common failure mode is baking in fixed, absolute thresh…
It's often said that the cruelty is the point.
If it were, why would they offer welfare programs at all? Surely an "indolence tax" assessed on anyone with income below a certain threshold would be more cruel.
Re: Suspicious discontinuities (2020)
#137Haha, I recall seeing a similar plot with a "suspicious discontinuity" when I looked up data on home appraisal price vs sale price. I remember asking the loan officer why the contract was forwarded to the appraiser before they did the appraisal, because that might bias their assessment. She gave me a funny look and replied "that's kind of the point."
Yeah of course, the appraiser is a person who is paid to write down the predetermined number. The US federal government should nuke this industry as part of their crackdown on "junk fees". Either the appraiser serves a legitimate arms-length purpose or their whole line of business should go away.
Appraisals function as a major fraud reducer, especially for internal fraud.
Appraisers will fudge $100k on the value of a $1m house because that's their opinion as an appraiser. They won't fudge $1m on the exact same house (2x value).
That serves as a kind of cap on funny business to some extent. 10% of the value isn't going to make that much difference on the ability to pay for most borrowers so an excess $100k in the valuation doesn't really matter anyway. As long as appraisals don't get too out of line they serve their purpose.
Re: Suspicious discontinuities (2020)
#138“Some other discontinuities are the TANF income limit, the Medicaid income limit, the CHIP income limit for free coverage, and the CHIP income limit for reduced-cost coverage.”
I know more than one person who intentionally keep low, part-time hours for this. One had a good, work ethic when on the job. Just didn’t want to lose those benefits.
Policy makers should definitely weight this into any decisions about reforms.
Re: Suspicious discontinuities (2020)
#139Marginal 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…
But these tax rates are all under the current government, why would single high earners vote for it?
Re: Suspicious discontinuities (2020)
#140If you are upset about somebody not wanting to take that $50k a year job because it would cost them a subsidy, just wait until you hear about trust funds and inheritance!! If you think losing a $20k subsidy is demotivating, imagine inheriting $25 million. So instead of knuckling down and working hard to contribute their fair share, they are incentivized to just loaf. No telling the costs to society from these freeloa…
- 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 about a $25 million subsidy disincentivizing somebody to improve themselves and contribute to society as a productive citizen.
> Trust fund babies are far more rare than people making ~$50k
That just means that imposing enough inheritance tax to incentivize them to work wouldn't effect enough people to have a negative effect on the economy. And lets not forget, the person being taxed is dead. They will feel absolutely no ill effects from the tax. Its all upside.
Not Trolling here. I advocate a 100% inheritance tax, the proceeds of which should be dedicated to education, nutrition, and housing for the next generation, to achieve the following goal: Equal ability should be given equal opportunity to succeed.
And just giving free money to one kid and nothing to another is the absolute diametrical opposite of that.