3678

You sound like a Paul Ryan complaining about the welfare system.

I agree system creates perverse incentives. I think they are virtually unavoidable. The progressive tax, and reducing benefits as your income goes up are two sides of the same coin.

So for instance here the law regarding the phase out of the child tax credit.

Tax Credit to $2,000 per child? (added June 14, 2021)

A4. The Child Tax Credit begins to be reduced to $2,000 per child if your modified AGI in 2021 exceeds:

  • $150,000 if married and filing a joint return or if filing as a qualifying widow or widower;
  • $112,500 if filing as head of household; or
  • $75,000 if you are a single filer or are married and filing a separate return.

The first phaseout reduces the Child Tax Credit by $50 for each $1,000 (or fraction thereof) by which your modified AGI exceeds the income threshold described above that is applicable to you.
A5. The Child Tax Credit won’t begin to be reduced below $2,000 per child until your modified AGI in 2021 exceeds:

  • $400,000 if married and filing a joint return; or
  • $200,000 for all other filing statuses.

The second phaseout reduces the Child Tax Credit by $50 for each $1,000 (or fraction thereof) by which your modified AGI exceeds the income threshold described above that is applicable to you.

If my math is correct a couple with two kids that make 400,001 pays $700 more taxes, than a couple who make $399,999. The tax code is filled with these phases along with limits and so is the benefits system, ACA subsidies for example. . In the case of SNAP it is designed so that every $ you earn you lose $.30 in benefits. Did this along with the increase in unemployment benefit, keep people at home during the pandemic. Almost certainly, and before we had a vaccine that was a good thing in my opinion.

My understanding is that in most states assets are monitored only at the beginning of the application, it is not like they are monitoring your checking accountand if ever raises about 2,000. They cut you off. If you go and apply when your checking account has $2,001. Go home buy some groceries, with a check, and go back apply the next day.

I’m really curious what you would do instead Shiva?

3679

Well his solution would be to get rid of anything resembling support and it’ll all just magically work out.
And he’ll be safe in his gated community while that happens.

They very much do for basically any assistance here.

Have limits that are more reasonable, just off the top of my head.

$2000 isn’t some insane amount of cash. I feel like some sort of path to creating a nestegg needs to exist. Or to be more accurate a way to shore up against the inevitable.

I’m pretty sure asking for lists of family heirlooms or fridges isn’t relevant at the end of the day.

And the different between someone making $400k a year paying $700 extra and someone making $700 a month and saving up $2k is pretty huge. Also that $400,001 person isn’t ever paying that $700 anyway because there are a dozen ways they can drop brackets. The poor person can never get around their limits unless they win the lottery, someone wills something to them, or their entire lives change (which does happen, but for a lot of people it never will).

Edit:
https://www.americanprogress.org/issues/poverty/reports/2014/09/10/96754/asset-limits-are-a-barrier-to-economic-security-and-mobility/

3680

This. The thing is, when you’re working poor, you still need a car to get to / from work, and that car is inevitably going to break down, because it’s going to be a piece of shit car, because you’re poor. When it breaks down, that’s when the real financial crisis strikes, because you don’t have any money to pay to get it repaired. You’re going to end up financing that repair at 27%, or you’re going to use the rent money, or both. Now you’re in worse trouble, because you can’t make the rent, not just now, but every fucking month, because you have to make payments against that car repair.

I feel like the people who think the welfare system is generous enough and reasonable and well managed, with good intentions and good safeguards against abuse, have never actually been poor. So they talk about the average benefit for a family of 4, as if everyone gets the average benefit for a family of 4, because that number looks to them like a generous number. And when someone says that maybe the system could be more generous, they respond by saying hey poor people here aren’t like poor people in the Sudan.

3681

Captain Vimes strikes again.

3682

In order to remove things like disincentives, it would make more sense to have benefits reduce gradually rather than all at once for some things. That way people aren’t put into a position where improving their lives results in them suddenly losing benefits and actually being worse off.

3683

Generally I think this right, but that approach leads inevitably to the charge that the benefits are going to people who don’t really need them, which leads to demands for more stringent needs testing, which leads to what we have.

3684

I see from your link that Idaho is one of only 10 states (maybe less cause the articles is a few years old) that hasn’t raised the Federal limits.). I have no problems raising the limits to a more reasonable limit, $5,000 or even $10,000, even allowing $20K cars. I do draw the line at the $50K Lexuses my friend saw. Although, it is overkill IMO for a food bank to do any type of means testing.

However, completely eliminating asset testing as was done with ACA has its own problems.

Take two couples making $40K/year a living in Las Vegas. Couple A, is 24, recent college grads, they have rent, student debt, need to buy furniture etc. Their employers don’t offer health insurance Couple B is 55, and are early retirees. They have a $400K house, they own free and clear. A $1 million stock portfolio and no debt. There 40K in income is entirely from dividends and capital gains distributions from their stock portfolio.

Neither couple owes much in the way of taxes, but couple A, pays $1500 in payroll taxes.

ACA says that the premium for health insurance should be capped at just over 3% of income, so both pay $109/month for an ACA silver policy ACA subsidizes the young couple $462/month while the older couple gets a $1191/month subsidy. The young couple would struggle to find the money to buy health insurance,while the older couple literally have $1 million dollar to pay for it.

There are 20 million, millionaires in the US, and I bet a decent percent of them are getting ACA subsidies.I could be one of them, but for a variety of reasons I’m not.

As the BBB bill, gets finalized, things like elder care which I think is particularly ripe for abuse, needed to be means tested.

3685

Why do you delight in inventing examples, or providing anecdotal examples, of people who really only exist on the margins of policy?

3686

Any good policy requires analysis of the edge case. You can’t just say, “well let’s just consider the case that I thought of, and assume the rest are cool.”

3687

I’ve been participating in Early retirement (FIRE) discussions for 20 years. I know that ACA was a game-changer in how much you had to accumulate to retire early because it dramatically reduced the cost of health care. I can give you screen names of hundreds of people, who are doing precisely what I outlined.

If a million, millionaires, (which I’ll admit is just a SWAG) get 12K/year subsidy that’s $12 billion year or $120 billion over the 10 year period. Don’t you think there are better uses of that money? Elder care in particularly is really open to abuse.

3688

image
image959×632 133 KB

(Sorry, the conversation just reminded me of this)

3689

Poor Helen Hunt.

3690

I think you’re dropping a couple of issues. E.g.

  1. ACA wasn’t just a game changer because of subsidies. ACA meant that retired people could get insurance more easily and cheaply (what was it before ACA? COBRA or some shit?) even if they were paying the bill themselves. For my part I went from being retired-and-uninsured to being retired-and-insured after ACA, because even without subsidies I could now get reasonably priced insurance and have the confidence that my insurance could not drop me after I got sick.

  2. A lot of people can get Silver level insurance for less than 12K a year. Mine runs me ~$4K.

  3. A lot of millionaires have aged out of being involved with ACA and subsidies, and instead are covered under Medicare. If we lower the Medicare age further, you’d have even less of those people to worry about.
    https://www.cnbc.com/2021/03/26/bernie-sanders-aims-to-lower-medicare-eligibility-age-in-recovery-bill.html

One more sidenote: I came across this while reading:

And while long-winded I think it gets across a point that a lot of us are trying to make. It’s fine if rich people take advantage of government services and benefits. As long as these people paid into the system, we’re not bothered that they’re getting some fraction of their payments back out.

3691

Better uses of the money you just made up? What?

3692

That chart kills me!

3693

Let’s all take a moment to appreciate that poor couple struggling with their $650,000 per year. Oh that tax increase!

3694

I mean, that whole convoluted mess of trying to match employment to health risks to doctor network to deductible coverage to the insurance is kind of a bad example for the efficiency of means testing, no? It’s pretty clear M4A would just wipe a whole sleuth of resources being needed to manage the whole thing, plus deal with the fallouts.

3695

Yes, ACA did solve a number of real problems like pre-existing conditions. Although, insurance companies were never allowed to drop you just because you got sick.
The price was for a couple, not an individual. What state can 55+ year old couple get a silver policy for $4K a year? Insurance cost vary greatly by state. I don’t just pull these out my ass. I use the Kaiser family foundation ACA calculator, and those are the exact numbers from the calculator.

First, that is an excellent article on how social security and medicare ARE already means tested. They aren’t even more aggressively means tested because people do pay into each program, via a specific tax. They MAY not enjoy the broad support they get if rich people were completely cut out. Although, I have heard a number of billionaires question why they should be getting social security.

The big difference between Medicare, and Social Security, and ACA, and the new child care and senior care is you didn’t pay into them, except for via Federal Incomes taxes. So there is no system for them to have pay into. So while you can all fantasize about M4A, the American people and President Biden have rejected it and it is not getting passed anytime soon.

The political challenge for the Democrats on BBB is to reduce the sticker shock from the price of these beneifts. Keeping the benefits of these programs from those at the top 40% (ideally) and certainly, the top 20% seems like a pretty good start.

3696

This isn’t the most important point, but when you’re doing these calculations:

It seems like you’re talking about individuals rather than couples. Also, by mentioning my $4K bill I was trying to point out that not everyone has $12K per year in health insurance costs, rather the costs are going to be in a range. So the average subsidy amount would almost certainly be less than what a 55 year old is paying. Anyway not the biggest deal since like you said you were just doing rough math.

3697