4 ms·

It's actually worse than that. There's often not any kind of sliding scale. Make $x and you get rental assistance, medical care for your kids, food aid, whatev

It's actually worse than that. There's often not any kind of sliding scale. Make $x and you get rental assistance, medical care for your kids, food aid, whatever. Make $x+1, and you get jack and shit. There's no reason for it to be that way, in a world with ubiquitous calculators and computers, but that's how it often is.

usrusr 6y ago
This. If you go on and calculate an effective tax rate "after welfare benefits", that "+1" could easily appear being taxed at six-digit percentages. Wealth people sob dearly when they see only 50 cent from a dollar they earned, but every welfare system striving for need-based distribution ends up having income points where you can consider yourself lucky if you don't see a net negative for a dollar earned.
Spivak 6y ago
The crucial bit is that there's a gap. Say financial assistance worth $12,000 is available for people who make <$20,000. * If you make $20,000 then your effective income is $32,000. * If you make $32,000 then your effective income is $32,000. * If you make $25,000 then you're effective income is $25,000. This creates a terrible incentive structure where you actually don't want to make more then $20,000 unless you're sure you can make more than $32,000. Well actually more because there's really no incentive to move up to $32,000 exactly. You have to make sure that when a person makes more money they are always better off for having done so. Having a hard cutoff for benefits doesn't work and neither does a back-off system that matches income (e.g. at $25,000 you get $7,000)
- SV_BubbleTime 6y ago
  This makes sense, and I think it would be hard to argue against. For all the descriptions though, there is a key lack of how to easily describe it. It’s missing it’s catch phrase if you will.

4 ms·

It's actually worse than that. There's often not any kind of sliding scale. Make $x and you get rental assistance, medical care for your kids, food aid, whatev

by Turing_Machine 6y ago

usrusr 6y ago
This. If you go on and calculate an effective tax rate "after welfare benefits", that "+1" could easily appear being taxed at six-digit percentages. Wealth people sob dearly when they see only 50 cent from a dollar they earned, but every welfare system striving for need-based distribution ends up having income points where you can consider yourself lucky if you don't see a net negative for a dollar earned.
Spivak 6y ago
The crucial bit is that there's a gap. Say financial assistance worth $12,000 is available for people who make <$20,000. * If you make $20,000 then your effective income is $32,000. * If you make $32,000 then your effective income is $32,000. * If you make $25,000 then you're effective income is $25,000. This creates a terrible incentive structure where you actually don't want to make more then $20,000 unless you're sure you can make more than $32,000. Well actually more because there's really no incentive to move up to $32,000 exactly. You have to make sure that when a person makes more money they are always better off for having done so. Having a hard cutoff for benefits doesn't work and neither does a back-off system that matches income (e.g. at $25,000 you get $7,000)
- SV_BubbleTime 6y ago
  This makes sense, and I think it would be hard to argue against. For all the descriptions though, there is a key lack of how to easily describe it. It’s missing it’s catch phrase if you will.