Yahoo Finance: Millions make Money
EMAIL Text
"This is an interesting article, to which I can testify. Last winter I was a volunteer with AARP, doing taxes at no cost for people. One of my early clients was a single mother, I'd estimate 30-35 years old. My impression is that she wasn't the brightest, but was honest and tried to do her best. She had one job, a cleaning lady for a local motel, sometimes working in the breakfast bar. It may not have been a full time job. Her W-2 showed income of just under $13,000, with about $800 withheld for IRS.
She was able to file as single, head of house hold. She received:
- Making work pay credit
- Earned income credit
- Additional child tax credit
- There may have been others, I don't recall anymore.
When I figured her final tax form, her refund was approximately $5,600, including the $800 withheld. She essentially received a "welfare payment" of $4,800 through the IRS tax system. Admittedly, her income was about the right amount to maximize some of the above credits. Now I felt good for this lady, as I felt she needed the help, that she had been working and trying, to the best of her ability. But I also realized what a welfare system our IRS tax code has turned into for may folks."
G2A's Serious and Smart Alec Replies/Thoughts
I would prefer that the money be transferred to these people via Social Services, just to keep the book keeping separate. (ie collections and expenditures) I enjoyed reading the Yahoo Finance explanation. It was interesting that much of it was a side effect of the Bush tax cuts. Including the "per child tax credit" with which citizens generously subsidize my raising my 3 daughters.... (sure kind of you)
As for whether, we should provide support for a single Mom who is making $15,000. My answer would probably be yes. Here are some reasons:
- Values basis: It sounds like she is trying and still can not earn a livable wage. (ie its only fair)
- Equity Basis: Sales tax, government fees, social security taxes, etc are a huge portion of her tiny income. (ie offsets these plus some)
- Christian basis: Jesus would want us to help the needy and the children. (ie rich in this life will suffer in the next... and vice versa...)
- Pragmatic basis: We need motel house cleaners, even if the job is low paying. (ie subsidize the industry and keep the rooms cheap...)
- Political basis: Keep feeding the destitute so they do not rebel or beg in the streets.
- Image basis: It would look bad if working people were starving or homeless in the richest country in the world.
1 comment:
Sounds to me like a litany of the standard liberal reasons for welfare of the "right" kind, that is, the kind that encourages work. unfortunately that list of reasons also explains why government welfare, whether by direct subsidy or through the IRS, is grossly inefficient and probably counterproductive of its stated aims. Towit:
I have long advocated "negative income tax" as an efficient means of operating government welfare with out all of the billions upon billions of dollars in overhead. If government is going to do the welfare/redistribution of wealth thing, this is a good way to do it EXCEPT:
We have to convert our income tax system to a single, simple system like the FAIR tax, or a flat tax with all other (and more regressive) taxes eliminated. The current system isn't fair to anybody because every dollar is taxed differently depending on who earns it, and where, and on what it is spent.
The tax would need to be graduated so that there would always be an incentive to earn more. The problem with the current welfare system is that you lose benefits if you go to work and those benefits are generally larger than what a starting wage job will pay. It has been called the "poverty trap."
I don't buy your pragmatic basis nor do I buy the political basis argument. I believe that the Christian basis would require all such charity to come from individuals and churches, and NOT from government at all. Your other two arguments are an attempt to argue that problems caused by government programs have their solutions in still other government programs. If we had a fair tax system that taxed only disposable income, the poor could take home every dollar they made and perhaps get by just as well as they do now, but without all the paperwork, and without picking the pockets of the rest of the taxpayers who are also trying to make an honest living. These things, broken by government intervention, eventually correct themselves if people are left in freedom. If no one will take that maid job, the salary will have to rise to make a living wage, or will be taken by someone who actually can live on $15,000 a year (tax free). (Or maybe we can keep the father in the home to make a viable economic unit, or avoid single motherhood in the first place.) That's /MY/ "values basis."
In short, I would argue against tinkering with the IRS code to fix this "problem." There is no possible way to make the current tax code fair by making it even more incomprehensibly complex than it currently is. If you want to scrap the whole thing and start over, we might solve this the right way.
J. Ewing
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