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Politics : Formerly About Advanced Micro Devices -- Ignore unavailable to you. Want to Upgrade?

To: combjelly who wrote (531596)	11/23/2009 12:06:14 PM
From: TimF	Read Replies (1) \| Respond to of 1576643

1 - If its true for those with part time minimum wage jobs, it still discourages people from taking that step which is a bad thing. 2 - Its not just for people with part time minimum wage jobs in Texas. People in TX don't pay lower federal income or payroll tax. They do have lower TANF grants, and also state income tax isn't an issue so its less of a problem in TX than in most other states, but even in TX the effective marginal tax rates (counting loss of benefits as part of the marginal tax rate, which one could reasonably object to, but the effect on income is the same, so they are thrown together for this calculation, even though loss of benefits technically isn't a tax) are very high for people moving through this area. At some points the marginal rate would be over 100%, but those points would be fewer in TX than other places. Still the rate doesn't have to be over 100%. For example an 85% effective marginal rate would be a powerful way to discourage people. Even in Texas people who maximize their recipient of income sensitive benefits face a rate that high or higher for most of the income range in question, and it looks like at least 50% for every single dollar in the range. 3 - The example was for VA, which is apparently more generous in TANF, and has a state income tax.. The example was not for TX. Showing how things are different in TX doesn't show the example as wrong. 4 - Other states are more generous than VA in TANF, and have higher state income tax rates. VA was not a cherry picked example to make the problem look worse. TX would be a special case to make it look not as bad. If you want the extreme cases look to the highest tax, and most generous benefit states. 5 - The calculations where done before the additional problems in this area created by "health care reform".