Welfare, a vicious trap: An idea to fixing the mess.
Let me start with pointing out why welfare can be considered a trap,
well trap might not really be a fair term, since trap would imply that
somebody made a mistake to be caught, in the case of welfare this is not necessary.
You only have to be a little unlucky to be caught in welfare, if you are going for welfare intentionally
then I think trap is a fair term.
Now let me explain why it is such a terrible thing in the current
Say a perfectly ordinary individual has been a littli down on his luck,
and end up on welfare, he also do not have any great prospects to get a new
job, so he goes on welfare (which might not be that simple), he is now in the position
that if he gets a job that pays less than he gets in welfare, he will be very heavily taxed
depending on how the welfare system has been structured he could even be taxed at more than a
100% rate, okay let me explain.
Say he gets a welfare rate of 10000$ a year (hypothetically), now he gets a part time job paying a 1000$ a year.
Okay simply addition suggests that would be 11000$ a year, but that is utopian, we forgot taxes.
Okay let's assume he pays a 10% tax rate (hypothetically), this would make his income with
the welfare and the job 11000 * 0.90 = 9900 (the 0.9 is to get his 90% share of the whole thing.).
This would already be a terrible deal, but being on welfare we need to consider the reduction on the welfare
which I suppose would be a 100% of the income, I suppose in a fair system you would only have to consider the
reduction to welfare, and have a 100% tax, although the 10% arguably is worse.
Paying a 10% income tax across the whole thing would be more like a 100% and then a bit tax rate.
So supposedly the more realistic method for calculating the tax probably would be
income = 1000$
tax = 10%
that might be decent if that is all the taxman takes, but I do suspect that there is a welfare reduction
of those some 900 waiting, which equals a 100% tax rate, if the
welfare is cut by the income before the tax was paid we are back at the 100% + rate.
A Possible way to start fixing the mess
I would suggest that the welfare not be income dependent, but time dependent
so you would get a number of months paid, any income you make in this period
will not be subtracted from the welfare, but when the time runs out you wont get more
That would be a great model, but if people for whatever reason are unable to hold down a job
they should have some welfare, but this should be a different system.
I think making in time based with no punishment for getting a job would be a much better solution.
Anyway what do you think about this suggestion ?
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