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Ultimately, this is a problem with all government benefits with an strict binary income limit. The result is that, in some circumstances, earning 1 more dollar
by jnwatson 6y ago
Ultimately, this is a problem with all government benefits with an strict binary income limit. The result is that, in some circumstances, earning 1 more dollar results in losing thousands of dollars. The marginal income tax system was set up this way for a reason.
If these unemployment benefits were paid out UBI-style, regardless of current employment, there wouldn't be a disincentive to find work.
- petre 6y ago> earning 1 more dollar results in losing thousands of dollars They might either go out of business or automate those roles if they can't afford to pay blue collar workers a living wage. I'm not a socialist, but some business do rip off low income workers. So they might as well cease to exist if they can't find workers to rip off, instead of claiming that people are lazy.
- christophilus 6y ago> The result is that, in some circumstances, earning 1 more dollar results in losing thousands of dollars. I think your new marginal rate only applies to anything over the limit that bumped you into a new tax bracket, so I don’t think this is right. A raise always gets you more money. The exception being if it bumps you out of the government assisted healthcare bracket. Then, a raise could indeed be a loss. Edit: I thought you were talking about income tax, but you might have been talking about business subsidies, which I know nothing about.
- somebodythere 6y agoThey are talking about welfare benefits. Many of these are structured so that the marginal dollar you earn results in $0.75 to $1000+ being taken away from you in benefits.