IDS: "I could live on £53 pw" Daily Telegraph: "Oh, really?"

[HMS Sophia]

From what I've been hearing apparently a lot of the problem is that the houses with those few buildings simply don't exist in the required numbers. So it's even worse than that.

This. Almost all new builds in this country (and it's been this way for at least a decade) are pretty much solely 3-5 bedrooms jobs. Any smaller than that are getting increasingly hard to find, especially in suburban areas.

[xthetenth]

It really seems like there's a huge disconnect there in that the government wants people to live in houses that don't exist in the numbers needed while looking for jobs that don't exist in the numbers needed. That's one of the more obvious ones I've seen yet.

[Korto]

Assuming you're talking about Newstart, at least we have the job bank thing to make it more appealing to go to work. When I started working, I had been unemployed/studenting for long enough that my first several months working saw no reduction in payments. By the time that ended, I was enjoying my work enough not to go on Centrelink again.

Yep, Newstart. Forgot about the cached amount you can earn. For others reading; like I said, you can earn $62 a fortnight without it affecting your payments, however, every fortnight you don't earn at least $48, each dollar under accumulates (up to $1000), and then any earnings you make later get counted against that first before affecting your benefits. It's really cool for the first bit of working when you not only get your work pay, but full benefits as well. It's a hell of a happy shock to the wallet.
I'll say, Gandalf, You're never flush on Newstart, but the British dole sucks.

From what I've been hearing apparently a lot of the problem is that the houses with those few buildings simply don't exist in the required numbers. So it's even worse than that.

Understood. That's why I said that without any requirement for there to be acceptable housing available before applying the penalty, it's just a disguised tax grab.

[Surlethe]

The idea that they'd have to turn down work because it would reduce their welfare benefits seems insane to me. Not that the US has a great system, but as far as I know (from experience as well as general knowledge), unemployment insurance and welfare are tuned so that if you are working while receiving either benefit, the benefit is never reduced by more than you receive in wages.

Absolutely NOT TRUE.

http://www.cbo.gov/publication/43709

(See Summary Figure 1 in the paper, for example.)

I'm not too stoked about your example, either. I = y + b - 0.75y = (1 - .75)y + b. Sure, great, it's not a penalty, but it's still a 75% marginal tax rate.

(I called baseline benefits "b" instead of "x" because it starts with b and also to make the intuitive link with the traditional y = mx + b formula.)

[Terralthra]

I did specify welfare and UI, not all benefit programs ever. Given the variety of federally- and state-administered programs with all sorts of thresholds and scaling across them, if you put enough of them together, there will be places on the graph at which marginal disposable income goes down by small amounts as gross income goes up.

If you refer to the reduction of means-tested benefits as a marginal tax rate, that sets one up for all sorts of problems incentivizing work. In order to incentivize working, strictly speaking, should we not then increase benefit amount as they receive more income? Should people who earn a million dollars a year get way more per month from SNAP to incentivize their hard work?

[Surlethe]

If I come across as angry, btw, it's not at you. I don't think you're making bad arguments. I just get a little riled up at how clunky and complex welfare systems can get, especially because this year my family's income inched across one of those +100% bumps. State medicaid for two kids: $700/yr. Private insurance plan for two kids and myself, who is already insured (since there aren't any insurance plans just for kids - thanks, Obama): $4000/yr, plus a $7000 deductible.

I did specify welfare and UI, not all benefit programs ever. Given the variety of federally- and state-administered programs with all sorts of thresholds and scaling across them, if you put enough of them together, there will be places on the graph at which marginal disposable income goes down by small amounts as gross income goes up.

And that's a major, major problem. We're basically subjecting poor people to marginal rates we wouldn't dream of imposing on the wealthiest 1%.

If you refer to the reduction of means-tested benefits as a marginal tax rate, that sets one up for all sorts of problems incentivizing work.

It's not the label that's problematic; what ultimately matters is how many resources someone commands after all the accounting is done. Call it a tax, call it reduction of means-tested benefits, it doesn't matter. Anything close to a 75% marginal reduction in benefits as income rises sets up a perverse burden on the lower classes.

Just to be concrete, let me put numbers on it: Say you're getting $15,000 per year of welfare benefits. You get offered a full-time slightly-better-than-minimum wage job, $16,000/yr. Your welfare benefits are cut by 75% of your new income, just over $10,000. New annual welfare payment: $3,000. New income: $18,000. At the end of the year, you have to judge whether taking on a thankless 40-hour-per-week grind at Wal-Mart is worth an extra $3,000 per year. Would you take the job?

In order to incentivize working, strictly speaking, should we not then increase benefit amount as they receive more income? Should people who earn a million dollars a year get way more per month from SNAP to incentivize their hard work?

Acu tetigisti. That's the difficulty of building a welfare system, isn't it? We need the after-tax, after-benefits income curve to be increasing, concave down. Anything else is basically reprehensible. Oh, and we need it to be revenue-neutral or positive. We can't be giving millions of dollars to millionaires, but we shouldn't be taxing poor people at 75% on the margin, either. Constructing a humane welfare system that doesn't lock down our poorest 30% deserves a lot more of our time and attention than it gets.

[Irbis]

That's the difficulty of building a welfare system, isn't it? We need the after-tax, after-benefits income curve to be increasing, concave down. Anything else is basically reprehensible. Oh, and we need it to be revenue-neutral or positive. We can't be giving millions of dollars to millionaires, but we shouldn't be taxing poor people at 75% on the margin, either. Constructing a humane welfare system that doesn't lock down our poorest 30% deserves a lot more of our time and attention than it gets.

Nope, it's actually pretty simple - just give everyone money to incentivitize. Millionaires? Sure, can get millions. Catch? Build tax rate with that in mind - sum free from tax should be enough to have average life, then the tax should be progressive, essentially rising faster than incentive once we get to top 20%, and much faster once we get to top 3-5%. Then, you can describe incentive, tax, and tax free sum as simple, loophole-less equation, where every year Ministry of Finance just puts current average wage. You can then easily add minimum benefits to jobless to it, say on a level of minimum wage, giving workers more negotiating power, and thanks to tax reform above you can turn off clawing back, as it won't matter anymore.