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.
Exactly, as my grandmother used to tell me...you might be broke, but you are never poor. Good manners, proper speech, and spotless morals cost you nothing, but reap great rewards.
First off the taxes are way too high. I lose $20 grand to taxes from my pay. I figure over 36% tax for starters then there are all the other taxes we run into. Heck I gotta pay .10 cents for a grocery bag now!!
I make far more then my father did yet he was able to build a 5,000sq/ft home for $43,000 back in 1962. Money is worth less now then in the “old days”.
My sister who refuses to work a full time job just wants enough to get by. She has a bad back but the stories she tells me about the various odd jobs she does tells me it is not that bad. She complains that the $802 a month SSI money she gets isn’t enough.... Any job would pay more plus she would retire with a larger SS check.
That's true for us today, but not for a lot of people in a lot of times. I was just reading about the soap shortage in World War II England, because the ingredients were going to war industries. Then there was the French factory workers getting sick from trying to cook with industrial grease ...
If I remember correctly, another term for that mindset is the crab bucket. All the crabs are going to be sold and cooked, but if one of them attempts to get out, all the others pull it back down.
LBJ’s own words...
http://truestorey.wordpress.com/tag/lbj/
When Kennedy’s successor, Lyndon Johnson, took the throne, he realized that the fight for segregation was a losing one and decided to flip the switch. LBJ was quoted as saying, “I’ll have those niggers voting Democrat for 200 years.”
...after JFK’s assassination, he had a chance to jump on the upcoming Civil Rights act of 1964 and claim it as his own. So he took advantage, in his own words, “These Negroes, they’re getting pretty uppity these days and that’s a problem for us since they’ve got something now they never had before, the political pull to back up their uppityness. Now we’ve got to do something about this, we’ve got to give them a little something, just enough to quiet them down, not enough to make a difference.”
Johnson did sign the bill but it is evident to anyone who looks close enough that he did not do it for any reason other than political gain. As with his appointment of Thurgood Marshall to the Supreme Court. He explained his decision to a staff member by saying, “Son, when I appoint a nigger to the court, I want everyone to know he’s a nigger.”
Part of the "American Dream" is the idea that "my children will have a better life than me, and their children even better".
There are two main kinds of immigrants: the best of their home countries, who didn't have the right "connections" to succeed in their home countries, and came here to get the opportunity to use their abilities. Then there are the bottom of the barrel, who come here to get welfare.
Before welfare, we would get the first category, and the US prospered from their energy. Now, with welfare, we get too many from the second category.
Proud to say my three have. They are 33,29 and 27, all make more money a year than I. I am a self employed Realtor and work full time at it, they have out done me and I am so proud.
My only girl, 29 is the most successful, driven to go to college, get a degree in marketing and is now getting job offers every year from different companies and offering her enormous sums of money to leave her current company. She is an SEO Analytics genius and they all want her at $90,000 to $120,000 a year!
BTW, a tip for getting an interview is update your Linked In page, she has her resume there, that is where the corporations are looking for recruits.
Incentives work?
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.