Trump's tax proposal: raise taxes on the poor, give to the rich

[Final-Fan]

SamuelRSmith said:

It was the same deal back in the UK. My grandmother was a cleaner in the local school, working part-time on minimum wage. The school wanted to boost her pay, not by much, but a couple pounds per hour. She fought against it, because it would lose her qualification for a number of programs she relied on, and thus would be on the net worse off.

I can't give you exact numbers, because this is going off my own memory from about 12 years ago.

I imagine this is part of the reason why so many Walmart and McDonald's employees end up living on welfare. It doesn't make much sense to go for a promotion or put in the extra 10 hours per week, etc, it'll make you worse off.

The simplest solution would be a gradual degradation of payouts. I'm a big proponent of collapsing all welfare programs into a universal basic income which takes the form of a tax credit, and a very high initial tax rate. For example:

$12,000 ubi refundable credit, first $24k taxed at 50%. Next $1k taxed at 0%, then whatever tax system you want to apply from $25k onwards.

So, if you have zero income, you receive the full $12k. If you have a job that pays $12k, your net income would be $18k, and when you earn $24k you'll receive nothing. You get $1k of "bliss" with no tax, and then from $25k it's whatever.

All these numbers I chose for the simplicity of the math. The average social security payout is a little above $12k, so it would probably be replaced by the UBI, too.

I do like the concept, but the main reason I'm skeptical about ideas such as your UBI is that I'm concerned about the severity of fraud.  I happen to think that welfare fraud is an overblown issue in some circles, but it would be different if every living citizen of the United States was due $230 per week.  But maybe I'm underestimating the power of American bureaucracy!