Apr

16

Congress enacted Aid to Families with Dependent Children (AFDC), and various housing programs in 1935; the Food Stamp Act in 1964; Medicare and Medicaid in 1965; the EITC in 1975 (and subsequent expansions of the credit in 1987, 1990, 1993, and 2001, among others); the Child Care Development Block Grant in 1990; welfare reform in 1996 (which replaced AFDC with TANF); the State Children's Health Insurance Program (SCHIP) in 1997; and the child tax credit in 1997 (expanded and made refundable in 2001).

With each subsidy for the poor, the marginal tax rate for anyone "at the bottom" trying to earn a living went up. Gene Steuerle estimated in 2012 that the marginal tax rate for a single parent with two children receiving the universally available benefits from our present system was over 54.5%; for that same parent who managed to get the maximum legally-allowable benefits, the marginal rate on earnings was 81.2%.

And people still wonder why the poor stopped getting and staying married, and the endless war on drugs became the perfect social solution (government jobs for "conservatives" as cops, prosecutors, prison guards, government jobs for "liberals" as social workers, legal aid lawyers, and teachers, cash income for the poor and places for the men to get food, shelter and gym memberships when they were between women.)


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2 Comments so far

  1. John Neufeldt on April 17, 2014 6:47 pm

    Sadly… it seems that a majority of the people “”at the bottom” trying to earn a living” do not understand that if they get their wish of tax rates being raised on people who earn more than they do, the result is inflation which makes it much more difficult for them work their way up from “”at the bottom”.”

  2. William Brauer on April 18, 2014 1:16 pm

    Generally agreeing with the observations, based on withholding tables and FICA taxes, the amount withheld from a low income wage earner with dependents is far far less than 54.5%, not to mention 81.2%. Even if we factor in sales taxes, gasoline taxes and the like how do you get to these astrnomical figures?

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