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Suppose the government gave poor people $10K

RoyLatham
Posts: 4,488
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5/29/2012 11:56:59 AM
Posted: 4 years ago
This is a trick question. Your job is to find the trick before I reveal it.

Let's suppose we wanted to decrease the disparity between rich and poor in the United States. The poverty level is about $23K and about 14% of the population is below the poverty level. So further suppose that the government issued a welfare payment of $10K to each poor person. roughly, what would happen to the number of of people classified as poor?

The answer is: about nothing. Government benefits are not counted as income. Medicaid, food stamps, ... none of it is income, nor is cash. "If public assistance welfare payments are your sole source of cash income, you don't need to include them on your tax return. ... If you are a part of a welfare-to-work program and earn income from a work training program or a job attained through such a program, you don't need to include this income on your tax return, ..." http://www.ehow.com...

If the benefit is paid by increasing taxes, then the net income of taxpayers would be reduced -- but net income is rarely counted in statistics either, only the taxable income. Taking all the money from the rich and giving it to the poor would have not effect on the disparity between rich and poor, at least the way it's now calculated.
YYW
Posts: 36,375
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5/30/2012 9:42:40 PM
Posted: 4 years ago
At 5/29/2012 11:56:59 AM, RoyLatham wrote:
This is a trick question. Your job is to find the trick before I reveal it.

Let's suppose we wanted to decrease the disparity between rich and poor in the United States. The poverty level is about $23K and about 14% of the population is below the poverty level. So further suppose that the government issued a welfare payment of $10K to each poor person. roughly, what would happen to the number of of people classified as poor?

The answer is: about nothing. Government benefits are not counted as income. Medicaid, food stamps, ... none of it is income, nor is cash. "If public assistance welfare payments are your sole source of cash income, you don't need to include them on your tax return. ... If you are a part of a welfare-to-work program and earn income from a work training program or a job attained through such a program, you don't need to include this income on your tax return, ..." http://www.ehow.com...

If the benefit is paid by increasing taxes, then the net income of taxpayers would be reduced -- but net income is rarely counted in statistics either, only the taxable income. Taking all the money from the rich and giving it to the poor would have not effect on the disparity between rich and poor, at least the way it's now calculated.

The Bush Administration tried something like this. It was an exercise in economic futility.

The problem is that individuals of a certain political persuasion see poverty as a social ill to be cured. Viewing poverty in this way is, fundamentally, a misdiagnosis.
Tsar of DDO
tyler90az
Posts: 971
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6/1/2012 12:07:01 AM
Posted: 4 years ago
At 5/29/2012 11:56:59 AM, RoyLatham wrote:
This is a trick question. Your job is to find the trick before I reveal it.

Let's suppose we wanted to decrease the disparity between rich and poor in the United States. The poverty level is about $23K and about 14% of the population is below the poverty level. So further suppose that the government issued a welfare payment of $10K to each poor person. roughly, what would happen to the number of of people classified as poor?

The answer is: about nothing. Government benefits are not counted as income. Medicaid, food stamps, ... none of it is income, nor is cash. "If public assistance welfare payments are your sole source of cash income, you don't need to include them on your tax return. ... If you are a part of a welfare-to-work program and earn income from a work training program or a job attained through such a program, you don't need to include this income on your tax return, ..." http://www.ehow.com...

If the benefit is paid by increasing taxes, then the net income of taxpayers would be reduced -- but net income is rarely counted in statistics either, only the taxable income. Taking all the money from the rich and giving it to the poor would have not effect on the disparity between rich and poor, at least the way it's now calculated.

Do you really think a poor person gets anything substantial from welfare?
Today we begin in earnest the work of making sure that the world we leave our children is just a little bit better than the one we inhabit today. - President Obama