Skip to comments.Why Are The Poor, Poor?
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.
My CPA put it this way....”All I can tell you is that the rich are getting richer.”
Human nature. When LBJ established the Welfare State he knew the effect it would have on it’s participants and was glad.
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.
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.”
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.
“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.
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.
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.
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.
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.
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.
ping for printing.
This is the “progressive tax rate” that Liberals are so proud of. It explains why the Middle Class is disappearing.
Christ said it when he said the poor will always be among us. As to why, he did not say.
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).
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.
“WHY YOU ACTIN’ SO WHITE?!!!!!!!”
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