[SapphireSun]

The real problem with these programs is that they are designed with a hard cut-off point rather than reducing the compensation at a slightly slower speed than private employment ramps up. For instance our tax system works in a rational fashion: you pay say 0% on the first 8k, 10% on the next several thousand and so on. In this manner, you are never disincentivised from trying to get more money because it's always positive (though more inefficient money accumulation wise).

What I don't understand is why we don't have programs (say unemployment benefits) where when you finally get work, the money you earn above the cut off replaces need based compensation dollar for dollar until you're free of the system. It makes no sense to cut people off the soon as they get a job when the job pays less than the program.

[nickff]

You're talking about what has been called a "negative income tax"; the idea has a long history, but was popularized in the USA by Milton Friedman. A form of this was implemented as the "earned income tax credit", but only as a supplement to traditional welfare programs.

http://en.wikipedia.org/wiki/Negative_income_tax

[SapphireSun]

Thank you for the link!