Welfare question

Discussion in 'Economics' started by riddler, Dec 16, 2012.

  1. Mav88

    Mav88

    you have to remember that workers comp is not even close to covering UE benefits. when you look at the entire federal budget and money in versus money out, UE is pretty big.

    If you are young your payrolls taxes are basically welfare for old poeple. There is no way you'll get it back.

    But yes, I would say $150B for medicaid SCHIP, food stamps, etc with another $270B by states and local http://www.usgovernmentspending.com/compare_state_welfare_spend

    Something in the 5-7% range of your income, excluding UE, seems about right
     
    #11     Dec 18, 2012
  2. Brighton

    Brighton

    Mav88 - I believe 80% of the "farm bill" is for food stamps, school lunches and even lunches in the summer when school is out. Have you added these dollars to your welfare calculation above? Same question about all the HUD/section 8 billions.
     
    #12     Dec 18, 2012
  3. zdreg

    zdreg

    salaries of gov't workers are a form of welfare
     
    #13     Dec 18, 2012
  4. Mav88

    Mav88

    80%? seems high but I'll believe you.

    Honestly I guessimated starting with $81B medicaid as a base. I think 7% would syill be about right, excluding UE.

    People are going to define welfare as they see fit. If you think about it properly however, close to a third of your payroll taxes you will never see again, more likely half. You should also include employer contributions. UE comes out of taxes.

    More realistically then about 12% of your income is for welfare @100K income (single).
     
    #14     Dec 18, 2012
  5. piezoe

    piezoe

    This is true if you are single without dependents and you die before drawing any benefits. If you live well beyond your actuarial death age you'll get it all back with interest and then some. If you die when expected, on average, you'll get most of it back, if not all of it, depending on how much you made in your working years and whether or not you leave a dependent spouse. (your social security pension is based on your contributions to social security over your most recent 35 years of employment.) If you become disabled at a young age you might get much more than you contributed back.

    So it depends. Social security is your and your neighbors protection against destitution in your old age. If you are fortunate enough to have disposable income, you'll want to build retirement fund on top of social security.
     
    #15     Dec 18, 2012
  6. This doesn't answer your question about what proportion of your paycheck goes to welfare, but it discusses total "means-tested federal welfare" spending, which is huge.

    http://globaleconomicanalysis.blogspot.com/2012/12/crazy-incentives-in-welfare-system.html

    "According to data from the Congressional Research Service, cumulative spending on means-tested federal welfare programs, if converted into cash, would equal $167.65 per day per household living below the poverty level. By comparison, the median household income in 2011 of $50,054 equals $137.13 per day. Additionally, spending on federal welfare benefits, if converted into cash payments, equals enough to provide $30.60 per hour, 40 hours per week, to each household living below poverty. The median household hourly wage is $25.03. "


    The 2nd chart in that article, about the welfare cliffs, is interesting. It's a chart from Pennsylvania’s secretary of Public Welfare showing that in many cases, people are getting so much welfare that to take a job would mean less income than they are getting from welfare.

    "As the above chart – via Gary Alexander, Pennsylvania’s secretary of Public Welfare — shows, the single mom is better off earning gross income of $29,000 with $57,327 in net income and benefits than to earn gross income of $69,000 with net income & benefits of $57,045."


    Just for the sake of balance, I want to point out that corporate and military welfare is just as bad or worse in terms of wasted money.
     
    #16     Dec 18, 2012
  7. Corporate welfare will motivate behavior of the corporation.

    I have no clue what we are trying to achieve with welfare for the poor. "Here's some money, free shelter. some heating oil and food stamps."
     
    #17     Dec 18, 2012
  8. Mav88

    Mav88

    I am married and had children. What you say is not true. First of all payroll taxes are not dependent on whether you are married and/or have kids so that doesn't matter. I don't know how you got your info but that is wrong. I've paid the maximum for many years whether I had 3 or 1 dependents.

    Secondly I have run the numbers, I will not get my money back unless I live to well beyond average death age, my spouse will also then have to live well beyond that. The only way I recover is if I incur large end of life medical costs.

    There is no getting around it, payroll taxes are not a good deal for anyone under 50.
     
    #18     Dec 18, 2012
  9. True..and I could go along with it to a LIMITED extent, so long as they permanently did away with guaranteed pensions that pay a fixed percentage of pre-retirement salaries. That is the absolute death of any fiscal reform...

    When you add it all up, it's entirely possible that 3-4 workers (present and retired) are being paid for some government jobs. For all we know, it could be costing $250k per year for a job that would only pay $40-50k in the private sector.
     
    #19     Dec 18, 2012
  10. piezoe

    piezoe

    I wasn't addressing all payroll taxes , I was addressing your statement: "If you are young your payrolls taxes are basically welfare for old poeple. There is no way you'll get it back." And specifically the last sentence of your statement.

    I was not referring to income tax which is part of your total payroll tax. However with respect to medicare and social security your statement is only correct under specific circumstances. Social security fica taxes don't depend on whether you have dependent children, or how many, but your social security benefits may, depending on the options you choose when you begin to draw on it and also when you die. It is clear that your knowledge of the features of social security is incomplete, as is mine. The best way for you to familiarize yourself with social security is to go to the social security website. It is also possible for you to draw more from medicare than you paid in, but I did not address anything to do with that.

    And it isn't at all clear that social security and medicare taxes are not a good deal for anyone under 50, as you assert. In fact your statement that it is not a good deal is flat wrong. Not only that, it is ridiculous, because a healthy person does not know when they will die, or if they will become disabled, or if they will leave dependents when they die; or how long they will live.

    You are correct about some of the conditions under which you would do relatively better with regard to return on your social security benefits. Also, as someone who pays the maximum into social security, you subsidize to a small extent the low wage earner in the benefits formula. However even that is a good deal for you, but that's a topic for another day.
    http://www.ssa.gov/survivorplan/onyourown.htm
     
    #20     Dec 18, 2012