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To: Wyätt Gwyön who wrote (12829)	8/21/2003 4:28:53 PM
From: GraceZ	Read Replies (2) \| Respond to of 306849

I'm definitely not confused, I know those tables in and out. What you are confused about is that when I say "income tax" you think I'm talking about income tax plus SS/Medicare (what you are calling payroll taxes). I'm talking about income tax. If you don't know the difference maybe you spend some time going over the history around the time when SS was set up and how it was purposely set up to be separate from general revenues. It's run a surplus since it's inception. The surplus goes into a trust fund which invests that money into a special Treasury bond. (they're worth about 1.4 trillion right about now) The rest gets paid out immediately to the numerous obligations that these two funds have taken on, SSI, Medicare, Medicaid payments to states and SS payments directly to recipients. It used to be that if you didn't pay in, you don't get to collect but that has changed considerably since it's inception. If a person works for the Feds, you've had an option to not pay into it but to pay into your own version. This whole thing was set up to protect poorer people from reaching old age and not having anything to live on. Then it morphed into a general welfare system, disability insurance as well as healthcare for the old and poor. The biggest provider of healthcare for that lower half is Medicaid. It's a pretty good deal considering I spend around 4k a year for my health insurance and then have out of pocket up to 3k a year after that. Are you suggesting that these same poor people be excluded from the program which frequently is the only income they have in old age and the only health coverage they might have or are you suggesting that after paying for my own healthcare I then pay for theirs as well? I do. Now if you examine the "earned income benefit" you'll see that many working poor with children (you can receive benefits up to 30k AGI) can and do wipe out all income tax they might owe, as well as any Social Security they or their employers paid in for them. For a single head of household making 5k AGI with two children, the payment is 183% of what they would have paid in SS/Medicare. I've helped numerous people file for the earned income credit, it's been around for a long time but as with most of these kinds of things, it has reached record levels of filers making use of it as well as gotten bigger and included higher and higher income levels. 40 million in 2002 and the cut off isn't until 30k. So your 15.3% baseline isn't quite right, you need to go back and do some math because in the case of that single head of household making 5k AGI with two kids the earned income credit provides 40% of their income, so they have a negative tax rate.