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0 pointsjewayne1y ago0 comments

> In light of this study, it seems to me that a cash-support system that wants to encourage work should have a starting region with a negative effective phase-out rate: "for every $1 you make up to $X, you get $0.25 more from UBI/Welfare." That would encourage labour-market attachment even if tenuous, and it would also have a side benefit of making the worker want to report the income, possibly uncovering under-the-table payment schemes.

Nobody tell this guy about the Earned Income Tax Credit. Let him think he discovered it.

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Majromax1y ago

> Nobody tell this guy about the Earned Income Tax Credit. Let him think he discovered it.

I know about the EITC, but the ETIC net of benefit clawbacks still presents a high marginal rate. Then the EITC itself gets clawed back at its own threshold, imposing a small region of high marginal rates. (The EITC itself is also rather paltry for filers without children.)

Additionally, the US tax system is ill-structured to really implement this. If you're trying to operate on the "under-the-table cash payments for day labour" margin, a system that depends on filing one's taxes to receive a refund later is not exactly hassle-free.

bombcar1y ago

The EITC isn't as complicated as the child tax credit; that one is not refundable so you end up trying to calculate a way to get enough tax to get it fully.

Excel1040 is great for this - https://sites.google.com/view/incometaxspreadsheet/home

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