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The impoverished are effectively trapped by the welfare system itself, because it reduces benefits as incomes rise at a faster rate than can be made up by the equivalent amount of work

This isn't true. The CBO extensivesly evaluates changes in benefits and taxes to calculate effectice marginal tax rates across the income distribution to make sure that you never make less money from working more. There are a couple of ranges where you will lose money from working more, but none of them are larger than 25c/hr.

https://www.cbo.gov/sites/default/files/114th-congress-2015-...



Some tax credits disappear faster than the rate of increased income. The only federal ones I'm familiar with are on the upper-middle-class portion.

California has some incentives that cliff at around $40k per household, no graduation (e.g. renters deduction).


The document you link to says:

  The marginal tax rates include the combined effects
  of federal and state individual income taxes, federal
  payroll taxes, and benefits from the Supplemental
  Nutrition Assistance Program and cost-sharing subsidies
  for health insurance, generally on the basis of 2016 law.
Unfortunately, SNAP and ACA health insurance subsidies are not the only means-tested welfare bits, and the other ones are _not_ being included here. Most prominently missing are Medicaid, TANF, and Section 8 housing, but there are a _lot_ of means-tested programs (e.g. Pell Grants) that only apply to certain households.

Now I do think it's true that the income ranges where the effective marginal "tax" rate is over 100% are fairly narrow for most households. But the ranges where the rates are less than 100% but not much less are far wider. And that gives you an effective take-home hourly wage that is tiny. If you happen to have kids, it almost certainly doesn't cover daycare costs, for example...


The analysis does include Medicade and TANF. Does not include section 8 because only a very small percentage of the non-elderly non-disabled poor receive section 8 housing subsidies.

Granted is there some small(~1-3%) portion of the poor who have a marginal effective tax rate greater than 100%. Probably. Are they representative of the vast majority of the poor? I don't think so.




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