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Why Are The Poor, Poor?
Townhall.com ^ | April 19, 2014 | John C. Goodman

Posted on 04/19/2014 4:08:38 AM PDT by Kaslin

Have you ever wondered why poor people are poor? It's not as though there aren't plenty of role models around. Millions of people live highly successful, productive lives in this country. So why don't people at the bottom of the income ladder copy the behavior of those several rungs above them and better their lot in life?

As I wrote previously, the federal government's own pilot programs established conclusively from the very early days of the War on Poverty that the welfare state encourages people not to be married, not to work and not to invest in human capital.

This is Gene Steuerle before a House Ways and Means subcommittee:

The chart below shows a hypothetical example whereby a family (single parent and two children) can receive nearly $30,000 in government benefits with no household earnings, but only about $10,000 in government benefits with $35,000 in household earnings.

So if the mother earns, say, $35,000 she loses about two-thirds of that amount in lost welfare benefits, and that's not even counting what the government will take in income and payroll taxes.

Steuerle's chart shows what incentives look like at a point in time. But activities today affect benefits tomorrow. For example, working and earning wages produces Social Security benefits and perhaps a private pension at the time of retirement. What do the incentives look like when we look at the lifetime effects of earning wages today?

That question was addressed in a study for the National Center for Policy Analysis by Jagadeesh Gokhale, Laurence J. Kotlikoff and Alexi Sluchynsky (NBER version here.) The authors explicitly incorporate future Social Security benefits as well as current payroll taxes to calculate lifetime marginal tax rates. They conclude that:

· Americans at every income level face a lifetime marginal net tax rate greater than 50 percent.

· That is, for every dollar they earn, they will lose more than 50 cents in higher taxes and reduced transfer benefits.

Furthermore, the highest marginal net tax rates are not imposed on the highest-income families. They are imposed on those with the lowest earnings. For example:

· At two times the minimum wage ($42,800), working couples get to keep less than 30 cents out of each dollar they earn.

· At 1.5 times the minimum wage ($32,100), they get to keep less than 20 cents out of each dollar they earn.

· By contrast, a couple earning $200,000 a year gets to keep 44 cents.

In a follow up study, Kotlikoff and coauthor David S. Rapson calculate the effects of working more hours for people at different income levels. They conclude that effective marginal tax rates are generally and substantially higher for lower-income households than for high-income households.

· For 30-year-old couples earning $20,000 the marginal tax rate on an additional dollar earned is 42.5 percent; yet those earning $50,000 a year face a marginal tax rate of only 24.4 percent.

· At age 45, couples earning $30,000 a year face a higher marginal tax rate (41.9 percent) than do those earning $200,000 a year (35.9 percent).

· At age 60, couples earning $10,000 a year face a marginal tax rate of 50.9 percent, compared to a 43.2 percent marginal tax rate for those earning $200,000!

Moreover, single-parent households who qualify for more benefit programs than do couples face astonishingly high marginal tax rates beginning at lower incomes. For example:

· At age 30, a single parent earning $10,000 a year faces a 72.3 percent marginal tax rate on an additional dollar earned due to their loss of welfare benefits; this rate is substantially higher than the 36.9 percent tax rate on the single parent earning $200,000.

· At 45 years of age, a single parent earning $20,000 faces a marginal tax rate of 42.9 percent; higher than a single parent earning $200,000.

· A 60-year-old single parent earning $10,000 a year faces a 50.9 percent marginal tax rate, while those earning $200,000 face a rate of 43.2 percent.


TOPICS: Culture/Society; Editorial
KEYWORDS: income; minimumwage; poor
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1 posted on 04/19/2014 4:08:38 AM PDT by Kaslin
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To: Kaslin

My CPA put it this way....”All I can tell you is that the rich are getting richer.”


2 posted on 04/19/2014 4:15:15 AM PDT by Sacajaweau
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To: Kaslin

Human nature. When LBJ established the Welfare State he knew the effect it would have on it’s participants and was glad.


3 posted on 04/19/2014 4:16:45 AM PDT by TalBlack (Evil doesn't have a day job.)
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To: Kaslin

Dependency is a drug that keeps you coming back and the end result is lazyness and hoplessness which soon turns to an arroagance and a demand.


4 posted on 04/19/2014 4:19:02 AM PDT by ronnie raygun
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To: Kaslin

When I was a child in the ‘60’s my father was sick for a whole year and did not work. We ate lots of potato’s. I asked my mother if we were poor and she said, “We don’t have much money but we’re not poor. I buy potato’s. Poor people spend their last dollar on cigarettes and beer. Being poor is a state of mind.”


5 posted on 04/19/2014 4:22:12 AM PDT by Gen.Blather
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To: Kaslin

The lives of the poor are the lives they, not us, have chosen to live. If you are poor, you are doing things wrong. Make better choices and have a richer life. Get educated, work, save, eat well, go to bed at night, clean your home, live healthy, avoid crime, hang with only good people, learn to speak well, learn to write well, practice doing things that seem hard to do until they become easy.


6 posted on 04/19/2014 4:22:31 AM PDT by Rapscallion (Obama is the corruption of America - economic, criminal, judicial, political, sexual, and more)
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To: Rapscallion

“Get educated, work, save, eat well, go to bed at night, clean your home, live healthy, avoid crime, hang with only good people, learn to speak well, learn to write well, practice doing things that seem hard to do until they become easy.”

There has to be opportunity for people to get ahead (which the US has had for much of its history). In other countries, exploitation was so bad the only remedy was to execute their ruling classes to get out of nstitutionalized poverty. While some poor people are in their situations because of their own choices, others are kept there by design.


7 posted on 04/19/2014 4:30:00 AM PDT by kearnyirish2 (Affirmative action is economic warfare against white males (and therefore white families).)
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To: Kaslin

There’s a horrible phrase.. “Don’t get above your raisings”. Beyond the English grammatical mistakes.. it is a phrase I’ve heard poor/lower class folk say to their young. Essentially, it is a socio-economic death knoll. Don’t try to be the first one to go to college. Don’t try to be a white collar worker when everyone else in the family is blue collar. Don’t use “uppity” words. Don’t put off marriage/children until later.. after education. Essentially, it is “keep the status quo”. I remember vividly a friend of mine and we were about eight or nine. She got straight A’s on her report card. Her Uncle said to her, “I guess it is alright as long as you are pretty”. Sheesh... I swear it is one generation fearful of the next one “out doing” them. In essence, it is a phrase/lifestyle that allows full participation in the family and obviously destructive. IMHO.


8 posted on 04/19/2014 4:37:18 AM PDT by momtothree
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To: Kaslin

As Einstein said, “It’s all relative”. If everyone was a millionaire, there would still be some that were richer than the others. And we would ponder why the “poor” millionaires were not given the same opportunities as the “rich” millionaires. Get my drift.


9 posted on 04/19/2014 4:43:06 AM PDT by Texicanus (Texas, it's a whole 'nother country.)
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To: momtothree

In predominately black high schools in Dallas, it is common for black kids to call others who are studying, trying to succeed, ‘being like whitey’. They are considered traitors to the ‘race’. This has to come from their parents.


10 posted on 04/19/2014 4:45:25 AM PDT by rstrahan
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To: Kaslin

The question is like asking “why are there car wrecks.”

In both cases, there are so many legitimate answers that it is ludicrous to even try to list them all. It is also an even more foolish enterprise to attempt to find one cause that applies to all or even most poor people or car wrecks.


11 posted on 04/19/2014 4:46:53 AM PDT by MrEdd (Heck? Geewhiz Cripes, thats the place where people who don't believe in Gosh think they aint going.)
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To: Kaslin

There is a whole poverty culture, enforced by those living in poverty and the politicians who seek their votes. It is meant to keep people in poverty, by teaching them they are entitled and by quashing their hopes for a better life. It is exceedingly difficult for one born into that culture to get out of it. I speak from experience.


12 posted on 04/19/2014 4:54:02 AM PDT by exDemMom (Current visual of the hole the US continues to dig itself into: http://www.usdebtclock.org/)
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To: Kaslin

ping for printing.


13 posted on 04/19/2014 4:55:05 AM PDT by VaRepublican (I would propagate taglines but I don't know how. But bloggers do.)
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To: Kaslin

This is the “progressive tax rate” that Liberals are so proud of. It explains why the Middle Class is disappearing.


14 posted on 04/19/2014 4:55:08 AM PDT by txrefugee
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To: Kaslin

Christ said it when he said the poor will always be among us. As to why, he did not say.


15 posted on 04/19/2014 5:01:15 AM PDT by Lion Den Dan
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To: Kaslin
At age 30, a single parent earning $10,000 a year faces a 72.3 percent marginal tax rate on an additional dollar earned due to their loss of welfare benefits; this rate is substantially higher than the 36.9 percent tax rate on the single parent earning $200,000.

Simple solution: cut welfare benefits so she has no choice but to work or starve. (Or, in real life, has no choice but to get married to some man who will support her).

16 posted on 04/19/2014 5:04:54 AM PDT by PapaBear3625 (You don't notice it's a police state until the police come for you.)
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To: rstrahan

It does. However, the “don’t get above your raisings”... came from the white families I knew. What amazes me is I think it is natural for a parent to want their child to do MUCH, MUCH better than they did. More education, better job, more money.. all of it. For example.. I want my three to “out-do” me by leaps and bounds. That’s what my parents wanted for their kids.


17 posted on 04/19/2014 5:06:25 AM PDT by momtothree
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To: momtothree

“WHY YOU ACTIN’ SO WHITE?!!!!!!!”


18 posted on 04/19/2014 5:15:52 AM PDT by FrdmLvr ("WE ARE ALL OSAMA, 0BAMA!" al-Qaeda terrorists who breached the American compound in Benghazi)
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To: rstrahan
it is common for black kids to call others who are studying, trying to succeed, ‘being like whitey’.
I have friends/relatives in education, and when they encounter that "being white" mentality, they always interject, "No, we want you to be like an American."
19 posted on 04/19/2014 5:18:15 AM PDT by oh8eleven (RVN '67-'68)
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To: Kaslin

bttt


20 posted on 04/19/2014 5:20:13 AM PDT by petercooper ("I was for letting people keep their health insurance, before I wasn't". --- Barack Obama)
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To: Kaslin

There are numerous reasons for poverty. What comes to mind are the following:

-laziness
-low intelligence
-poor education system
-lack of moral character
-government handouts
-children being born outside of marriage

Actually, if the moral character issues were solved, the other problems would disappear.


21 posted on 04/19/2014 5:21:45 AM PDT by JudyinCanada
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To: momtothree

That sounds a lot like my shiftless in-laws.

On the other hand, when my grandmother said, “Don’t get above your raising,” she meant, “Even though you got an education and moved away from the farm, you still have to follow the Commandments, be honest and loyal, and respect your elders.”


22 posted on 04/19/2014 5:24:15 AM PDT by Tax-chick (Entropy is high. Wear a hat! And carry an umbrella.)
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To: PapaBear3625

I believe that Benjamin Franklin once said ‘...make no one too comfortable in their poverty.’ Perhaps our current ‘rulers’ are wiser than he.


23 posted on 04/19/2014 5:28:43 AM PDT by dogcaller
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To: Kaslin

Because the government doesn’t give them enough money, silly question. /s


24 posted on 04/19/2014 5:29:55 AM PDT by bigbob (The best way to get a bad law repealed is to enforce it strictly. Abraham Lincoln)
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To: Gen.Blather
“Wealth consists not in having great possessions, but in having few wants.” ― Epictetus
25 posted on 04/19/2014 5:34:27 AM PDT by DUMBGRUNT
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To: Kaslin

Bums LLC.


26 posted on 04/19/2014 5:34:38 AM PDT by onedoug
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To: Gen.Blather
Being poor is a state of mind.

Exactly. In some races/cultures, poverty is generational. Yet in others, like Asians who came here with only the shirts on their backs, each generation is more successful than the last.

27 posted on 04/19/2014 5:40:40 AM PDT by randita
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To: FrdmLvr
“WHY YOU ACTIN’ SO WHITE?!!!!!!!”

The best response would be "I'm not acting white, I'm emulating an African." African immigrants academically out-score and out-graduate native caucasians.

It's not race. It's culture. American black culture sucks.

28 posted on 04/19/2014 5:42:11 AM PDT by Sirius Lee (All that is required for evil to advance is for government to do "something")
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To: Kaslin

http://blog.skepticallibertarian.com/2013/04/15/fake-quote-files-v-i-lenin-on-inflation-and-taxation/


29 posted on 04/19/2014 5:44:31 AM PDT by Jack Hydrazine (Pubbies = national collectivists; Dems = international collectivists; We need a second party!)
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To: Sacajaweau

“My CPA put it this way....”All I can tell you is that the rich are getting richer.””

It’s the dems economic policy they call “trickle up economics” and it means just what it says.

It’s a paradox.

The higher you raise taxes on the rich to provide goods and services for the poor, the rich will get richer and the poor will get poorer.

If the govt collects taxes then spends the money to pay for an ice cream cone for a poor man, the wealth doesn’t get transferred to the poor man getting the ice cream cone, he has an ice cream cone which is gone when he eats it.

The wealth gets transferred to the top, the man selling the ice cream cone.

Since LBJ’s “war on poverty” there has been, IIRC, around $20 trillion spent.

If that was a transfer of wealth to the poor as everyone wants to believe, then the poor would be rich, and they’re not.


30 posted on 04/19/2014 5:53:07 AM PDT by IMR 4350
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To: Kaslin
Why Are The Poor, Poor?

The poor are poor for exactly the same reason the rich are rich. They both keep doing the things that make what they are.

31 posted on 04/19/2014 5:54:22 AM PDT by MosesKnows (Love many, trust few, and always paddle your own canoe.)
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To: Kaslin

Most all of us have been poor. Fresh out of college, living in a cheap apartment and scrimping on groceries, I was as poor or poorer than a welfare recipient. What I did do was work harder and smarter. What I didn’t do was drugs, alcohol, father children or commit crimes.


32 posted on 04/19/2014 5:58:42 AM PDT by muir_redwoods (When I first read it, " Atlas Shrugged" was fiction)
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To: Kaslin

It’s a simple formula: Do the wrong thing = get a benefit; do the right thing = get no benefit and pay at the point of a gun for the benefits of people who do the wrong thing.


33 posted on 04/19/2014 6:06:25 AM PDT by Mr Ramsbotham (Laws against sodomy are honored in the breech.)
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To: Kaslin
148M Benefit Takers

Beneficiaries seem to be doing pretty well.


The poor in this country have the opportunity to access many government benefits programs.
34 posted on 04/19/2014 6:07:38 AM PDT by TomGuy
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To: muir_redwoods
What I didn’t do

More often than not it is what people don't do that makes them who they are.

America became great because of what the Constitution prohibiting the government from doing. You can see what happens to America when government does what the Constitution forbids government from doing. It is not different for people. You can see the consequences of the life style choices people make.

The problems most people face in life are the result of the choices they made. Their problems begin when they take the decision to exchange what they want most for what they want now.

35 posted on 04/19/2014 6:39:01 AM PDT by MosesKnows (Love many, trust few, and always paddle your own canoe.)
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To: Sirius Lee

“African immigrants academically out-score and out-graduate native caucasians.”

You never met Somalians. When they get on the Welfare, they tend to stay there.


36 posted on 04/19/2014 6:42:00 AM PDT by AppyPappy
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To: AppyPappy

Many years ago, Carl Rowan, a black LIB columnist in the Washington Compost wrote an editorial entitled “acting white”. It talked to how many blacks deride others who work hard, go to school and generally act responsibly as “acting white”. His column was not well-received by the black and LIB readers.


37 posted on 04/19/2014 7:05:15 AM PDT by hal ogen (First Amendment or Reeducation Camp?)
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To: IMR 4350
Democrats often portray themselves as a beacon to the poor
and say Republicans cater to the rich.

The logic of that observation must be the following.

In order for the party of the rich to gain more votes, that party would assist as many Americans as possible to become richer.

Then this must also be true.

In order for the party of the poor to gain more votes, that party would assist as many Americans as possible to become poorer.

38 posted on 04/19/2014 7:07:14 AM PDT by MosesKnows (Love many, trust few, and always paddle your own canoe.)
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To: Sacajaweau

I hope your CPA exhibits greater knowledge and wisdom when preparing your return.


39 posted on 04/19/2014 7:13:52 AM PDT by Balding_Eagle (Want to keep your doctor? Remove your Democrat Senator.)
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To: Kaslin

If you took the money from the rich and gave it to the poor, the rich would have it all back and the poor will still be poor within a matter of months.


40 posted on 04/19/2014 7:15:41 AM PDT by dfwgator
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To: Texicanus
"And we would ponder why the “poor” millionaires were not given the same opportunities as the “rich” millionaires."

Which is exactly where we are today. The current definition of poverty would be a joke if it wasn't so fraudulent and evil.

41 posted on 04/19/2014 7:30:01 AM PDT by I am Richard Brandon
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To: Sirius Lee
“Africans outscore and out graduate native Caucasians”>>>>

You might be on to something. My nephew and his wife have adopted 2 black children from Africa. the oldest one is about 14 now and he is a brilliant student and a fantastic athlete. The younger one is headed that way too.

42 posted on 04/19/2014 7:31:47 AM PDT by Ditter
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To: Kaslin

Being poor is just a lack of assets at the moment. Poverty on the other hand is a matter of self worth. I have been poor,but I’ve never been in poverty. I simply refuse to except that.


43 posted on 04/19/2014 7:38:24 AM PDT by The Toll (e)
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To: Sirius Lee

Africans who come to this country want nothing to do with “African-Americans”.

I have several friends from Nigeria that confirm this.


44 posted on 04/19/2014 7:41:20 AM PDT by dfwgator
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To: rstrahan

That’s not limited to Dallas.


45 posted on 04/19/2014 7:54:00 AM PDT by Rusty0604
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To: TalBlack

Even FDR knew it.

From the 1935 SOTU address:

“A large proportion of these unemployed and their dependents have been forced on the relief rolls. The burden on the Federal Government has grown with great rapidity. We have here a human as well as an economic problem. When humane considerations are concerned, Americans give them precedence. The lessons of history, confirmed by the evidence immediately before me, show conclusively that continued dependence upon relief induces a spiritual and moral disintegration fundamentally destructive to the national fibre. To dole out relief in this way is to administer a narcotic, a subtle destroyer of the human spirit. It is inimical to the dictates of sound policy. It is in violation of the traditions of America. Work must be found for able-bodied but destitute workers.

The Federal Government must and shall quit this business of relief.”


46 posted on 04/19/2014 7:56:47 AM PDT by dfwgator
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To: txrefugee

Rush said it best, some People work for a Living and some people Vote for a Living.


47 posted on 04/19/2014 8:01:16 AM PDT by Kickass Conservative (Nobody owes you a living, so shut up and get back to work...)
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To: muir_redwoods

While I am not 4-for-4 like you, growing up in the lower end financially ensured that I knew what I did NOT want to do, which was a great motivator for me to do what needed to be done (college education). While our family was always struggling in the early years of my youth, my upbringing was well grounded in Christianity, hard work, education, etc. Looking back, I owe everything I am today to those early years.


48 posted on 04/19/2014 8:03:47 AM PDT by SgtHooper (I lost my tag!)
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To: Kaslin

Poor is a practiced decision.


49 posted on 04/19/2014 8:05:57 AM PDT by Blue Collar Christian (Vote Democrat. Once you're OK with killing babies the rest is easy. <BCC><)
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To: Kaslin

Poor people have poor habits


50 posted on 04/19/2014 8:06:05 AM PDT by goodnesswins (R.I.P. Doherty, Smith, Stevens, Woods.)
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