[koliber]

I wonder what is the difference between the two groups as far as the rate of finding employment. Might be that the act of looking for a job is stressful.

If the goal is to get people back to work, it might not make sense to optimize just for better mental health.

[LorenPechtel]

And note that actually getting work removed the controlled money. That's quite a disincentive to actually finding work. Welfare systems very often end up being a trap because of this--people can't afford to succeed because they'll hit some tripwire that makes them worse off.

I'd like to see welfare systems and tax codes modified with a rule that no situation can cause more than a 50% marginal "tax". (Which would mean many cutoffs in the tax code would effectively be replaced with phaseouts even if Congress didn't specifically fix them.)

[thewebguyd]

> Welfare systems very often end up being a trap because of this--people can't afford to succeed because they'll hit some tripwire that makes them worse off.

This is very much a problem in the US. I've lived it myself before I was making 6+ figures, and I've known many people that lived through it as well.

I had a higher quality of life working very part time minimum wage + benefits (SNAP, free healthcare, subsidized housing) than I did making 50k/year.

Most on welfare like that, you actually end up with a much worse quality of life the moment you make a little more money or find a better job and lose your benefits. There's far too big of a gap between "needs assistance" and "makes enough money to have the same or better quality of life as being on benefits" so for most, you just purposely work less or work lower paying jobs in order to keep collecting benefits because to do otherwise means you are worse off.

For someone who has subsidized housing, free healthcare, and SNAP, why would purposefully lose all of that, but still remain poor, just because now you work 40 hours/week instead of 20. Unless you can make a huge jump (say, go from minimum wage up to $75k+/year immediately), don't bother trying to get off welfare, it won't do you any good.

[mgerdts]

This article is a great read explaining how this trap happens.

https://www.yesigiveafig.com/p/part-1-my-life-is-a-lie

[bena]

The tax code (at least in the US, YMMV in other countries) is already progressive. Making more will never have you taking home less.

However, most welfare systems have hard cutoffs. If you get $500 in SNAP a month and make $500 a month, you have $1000 to last a month. And if the cutoff is $501, making that one extra dollar is going to cost you $499.

What would be more difficult, also gameable, but better all around is to have benefits adjusted to get people to a baseline.

Say the poverty level is $1000 a month. You get $1000 - X, where X is how much you made in that month.

[dragonwriter]

> However, most welfare systems have hard cutoffs.

Most welfare systems have phased benefit reductions (there is a point where the benefit hits zero, which can be viewed as a hard cutoff, but it doesn't go "full benefit up to the line and then zero at the line" in most cases, though there are exceptions.

> If you get $500 in SNAP a month and make $500 a month, you have $1000 to last a month. And if the cutoff is $501, making that one extra dollar is going to cost you $499.

If the SNAP cutoff applicable to your situation was $501, then your actual benefit at $500 would be $24 (the minimum SNAP benefit), not $500. Because SNAP does a $0.30 per dollar of income clawback until the minimum benefit is reached, and then stays at the minimum benefit until the eligibility limit income is reached.

There is a cliff still, but its a lot smaller of a cliff (for SNAP alone) than you are painting.

[LorenPechtel]

I'm talking about the US. You're looking at the simple version: just income. But the tax code is more than income--there are many benefits that go away at a specific AGI--if you use that benefit you can have an effective tax rate of over 100% in the realm just above the fence.

And your system doesn't work. Working is almost never truly free, you have to spend some money to make money. And you don't have that time available to do other things that stretch the money you have.

[gamblor956]

Almost all income tax related benefits are phased out. Which ones are subject to a hard cap?

[sokoloff]

> Making more will never have you taking home less.

There are corner cases where making more can leave you with less outside of welfare. Tripping into the next IRMAA bucket is one simple to understand one.

[phil21]

Medicare is a form of welfare, just branded differently. It's a means-tested benefit funded in a pay-as-you-go manner via income tax just like any other. The means are just different amongst various programs.

Are there any actual cases of making more earned income via a regular job worse than taking that extra dollar of pay? I'm guessing a few very rare corner-cases exist, but I can't immediately think of any. I imagine they would be somewhere in the neighborhood of the EITC or AMT type things.

[LorenPechtel]

I didn't need to press enter. Just started typing agi limit and a whole bunch of search topics came up asking about agi limits for various tax things.

[seanmcdirmid]

Medicaid is a form of welfare, Medicare is an entitlement. Where is Medicare means tested?

[bena]

That's dealing with Medicare, not taxes.

And basically, as your income goes up, so does your Medicare premium.

[parpfish]

Wouldnt it be easier to just give everybody $1000/mo but then use the yearly tax bill to get high earners to pay it back rather than having graduated payouts?

That ensures that everybody gets prompt payouts and feels that there’s a safety net, but no complex means testing and bureaucracy. And the same net cost, although the timing of the payouts will shift a bit

[limagnolia]

But SNAP doesn't have a hard cutoff. There are welfare programs that do, but SNAP doesn't.

School lunch programs have two phases, free, and reduced. Medicaid varies a bit by state, but transitions to Obamacare subsidies. Hitting the cutoff for medicaid can really hurt, though, if your employer doesn't provide healthcare benefits.

[blell]

>Welfare systems very often end up being a trap because of this--people can't afford to succeed because they'll hit some tripwire that makes them worse off.

Or maybe they consider getting money you can live on without working to be a success. I know I would.

[bjourne]

You're probably not aware that €560 is subsistence money in Finland. Eat noodles every day, sell your car, keep indoor temperature at 18 C to save electricity, then maybe you have enough to pay rent. The idea that people in that situation needs to be kicked even harder to "get of their lazy asses" is cruel.

[koliber]

No one needs to be kicked to do anything. Welfare payments are needed for various reasons. Some people are unable to work for various reasons and need welfare to live. Some people find themselves in temporary situations where the money helps them during hard job transitions or difficult periods in life. It’s important to give people incentives to help them achieve what will make their lives truly better. Sometimes, free money removes those incentives and temporary situations become permanent. I hope you don’t perceive all incentives to encourage constructive behavior as “kicking people.”