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Work disincentives hit the near-poor hardest (2022)

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Re: Work disincentives hit the near-poor hardest (2022)

#51

Post by CalRobert »

littlestymaar wrote: post #47
ternus wrote: post #12

I can't find the original tweet, but someone (half?) jokingly proposed a law that all benefits must be defined as continuously differentiable functions (thus making cliffs impossible). "Yeah, I made $1M last year. Here's my SNAP check for six cents."

It's not sufficient to make cliffs impossible, you just never want the effective marginal tax rate go above a certain threshold. It's insane that we cap marginal tax rates for the wealthy below 50% “because they need incentives to work harder” yet the working class family is facing an effective marginal rate near 100% because of reduced benefits. The solution would simply be to stop making benefits decrease when sala…

I agree with you, but for what it’s worth I live somewhere top marginal rates are about 50% and indeed 32 hour weeks are very common. I think this is a good thing though.

Re: Work disincentives hit the near-poor hardest (2022)

#52

Post by rob74 »

littlestymaar wrote: post #49
Arainach wrote: post #35

Earlier quoted context omitted.

What "current results" are you referring to? No, people 50+ years ago weren't arguing that cliffs can lead to disincentives, they were arguing that the whole system is "socialism" and bad - something that has been repeatedly disproven. There are few things more evil in our society than the breed of conservative that will talk about how their family needed social welfare growing up to survive, how it worked and they d…

> What "current results" are you referring to? No, people 50+ years ago weren't arguing that cliffs can lead to disincentives, they were arguing that the whole system is "socialism" and bad - something that has been repeatedly disproven. In fact, we have disincentives like that because they were arguing that having a flat benefit for everyone would be socialism. If you don't reduce benefit with income level, these di…

A flat benefit for everyone that doesn't reduce with income level would be universal basic income, which has many supporters in theory, but has never been implemented in practice so far, not even in the most socialist countries of the 20th century...

Re: Work disincentives hit the near-poor hardest (2022)

#53

Post by NoMoreNicksLeft »

conception wrote: post #23
ternus wrote: post #12

I can't find the original tweet, but someone (half?) jokingly proposed a law that all benefits must be defined as continuously differentiable functions (thus making cliffs impossible). "Yeah, I made $1M last year. Here's my SNAP check for six cents."

They should be. And for the great majority of citizens, they should be calculated automatically along with taxes without the need for filing/paperwork. But we must think of the Intuit shareholders and the harm that that would cause them.

I like my cliff. I earn enough that I and my family are ineligible for most welfare schemes. I do not want even 6 cents worth of SNAP. I spent my entire childhood on that, and it disgusts me. Thus, were this policy ever seriously proposed, I would do what I can to dissuade my legislators from voting it into law.

There are others like me, too, I am not unique.

Re: Work disincentives hit the near-poor hardest (2022)

#54

Post by NoMoreNicksLeft »

N_Lens wrote: post #2

I remember reading this book called 'The Losers' ( https://www.goodreads.com/book/show/2114133.The_Losers ) about a privileged man who has a car accident, becomes disabled and comes to rely on government support. The book looks at the lives of the working poor and actually poor, who rely on welfare cheques and other subsidies and highlights the social and psychological impacts of these systems of support. It was very…

>I know it's probably not intentional but I believe welfare in the US absolutely is rife with negative outcomes and negative incentives for people receiving support, it doesn't uplift and enable success, it keeps people trapped in poverty and a mindset of helplessness.

That's the best way to ensure their vote in the next election for the welfare party.

Re: Work disincentives hit the near-poor hardest (2022)

#55

Post by littlestymaar »

rob74 wrote: post #52
littlestymaar wrote: post #49

Earlier quoted context omitted.

> What "current results" are you referring to? No, people 50+ years ago weren't arguing that cliffs can lead to disincentives, they were arguing that the whole system is "socialism" and bad - something that has been repeatedly disproven. In fact, we have disincentives like that because they were arguing that having a flat benefit for everyone would be socialism. If you don't reduce benefit with income level, these di…

A flat benefit for everyone that doesn't reduce with income level would be universal basic income, which has many supporters in theory, but has never been implemented in practice so far, not even in the most socialist countries of the 20th century...

No it's not. Not all benefit is “income” and not all such income is universal. And it also has nothing to do with socialism (socialism is about forbidding the private property of the means of production! Please stop calling every kind of public intervention “socialism”, that's as ridiculous as calling all Republicans “fascists”).

For the non-income version see countries with free schools or free hospital, and for an example of an income benefit see the French Allocation familiales, which until 2015 were given to every family with 2 child or more no matter the parents income.

There were plenty of such systems, and some of them still exist (AFAIK the US social security is one of those, you don't lose access to the benefits even if you're rich)

Re: Work disincentives hit the near-poor hardest (2022)

#56

Post by dgoldstein0 »

INGELRII wrote: post #48
ternus wrote: post #12

I can't find the original tweet, but someone (half?) jokingly proposed a law that all benefits must be defined as continuously differentiable functions (thus making cliffs impossible). "Yeah, I made $1M last year. Here's my SNAP check for six cents."

There is idea behind that, but continuous is not enough. The variable is all transfers, taxes and benefits T = [all taxes - all benefits] as function of income per person (including children). T starts negative (benefits are negative taxes). Goal: monotonously increasing effective marginal T rate.

This. No need for continuity in the derivative - the marginal tax rate should be fine to jump around - but should start low (I'm fine with negative) and increase as you earn more. Like US federal tax brackets, but with benefits also considered.

Re: Work disincentives hit the near-poor hardest (2022)

#57

Post by harvey9 »

NoMoreNicksLeft wrote: post #53
conception wrote: post #23

Earlier quoted context omitted.

They should be. And for the great majority of citizens, they should be calculated automatically along with taxes without the need for filing/paperwork. But we must think of the Intuit shareholders and the harm that that would cause them.

I like my cliff. I earn enough that I and my family are ineligible for most welfare schemes. I do not want even 6 cents worth of SNAP. I spent my entire childhood on that, and it disgusts me. Thus, were this policy ever seriously proposed, I would do what I can to dissuade my legislators from voting it into law. There are others like me, too, I am not unique.

The cliff here means a disincentive to go for a slightly better paying job because you end up with less overall. I think the 6 cents was hyperbole.

Re: Work disincentives hit the near-poor hardest (2022)

#58

Post by jaredklewis »

truelson wrote: post #37
conception wrote: post #23

Earlier quoted context omitted.

They should be. And for the great majority of citizens, they should be calculated automatically along with taxes without the need for filing/paperwork. But we must think of the Intuit shareholders and the harm that that would cause them.

If someone in the coming years ran on taking down regulatory capture and returning that as social safety net funding, public goods, and lower taxes, and had the chops to actually deliver, they'd do well. Though best to start local government first, obviously. We're reaching breaking points in so many places...

“They’d do well.” That is not the lesson I’ve taken from the past 15 years of politics in the US and abroad.

Political candidates actually interested in taking on the very difficult and nuanced task of governing are routinely drubbed by edge lord culture warriors or candidates that simply promise the world without any regard to annoying facts like existing laws, budget deficits, or basic tenets of economics.

I definitely agree there is probably less disfunction and greater chance for reform at the local level.

Re: Work disincentives hit the near-poor hardest (2022)

#59

Post by dgoldstein0 »

littlestymaar wrote: post #47
ternus wrote: post #12

I can't find the original tweet, but someone (half?) jokingly proposed a law that all benefits must be defined as continuously differentiable functions (thus making cliffs impossible). "Yeah, I made $1M last year. Here's my SNAP check for six cents."

It's not sufficient to make cliffs impossible, you just never want the effective marginal tax rate go above a certain threshold. It's insane that we cap marginal tax rates for the wealthy below 50% “because they need incentives to work harder” yet the working class family is facing an effective marginal rate near 100% because of reduced benefits. The solution would simply be to stop making benefits decrease when sala…

> The solution would simply be to stop making benefits decrease when salary goes up.

That's an option, and I'd be interested in how the math works especially with predictions of how the economy would respond.

That said I don't think not decreasing benefits is an important requirement. But net income (benefits + earned income - taxes) should be strictly increasing with earned income, and probably at a rate of at least 50% but ideally higher than that up to some reasonable definition of middle class income. It should never be the case that if you earn more you can end up worse off.

Re: Work disincentives hit the near-poor hardest (2022)

#60

Post by [deleted] »

aidenn0 wrote: post #31
ternus wrote: post #12

I can't find the original tweet, but someone (half?) jokingly proposed a law that all benefits must be defined as continuously differentiable functions (thus making cliffs impossible). "Yeah, I made $1M last year. Here's my SNAP check for six cents."

That can still have work disincentives; anywhere the magnitude of slope of the benefits is close to (or steeper than) the slope of the income as it phases out, then working more can get you no gain (or lose you money).

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