I went to school at a relatively late age and started in community college. The school/state had a policy where any independent income earners making less than 35,000/year would not pay tuition. A single dollar over that would require paying full tuition of ~$60/unit or about $750 a semester. One year I worked a little more overtime during the holidays than usual and realized with a week to go in the year that I'd go a few hundred dollars over, so I called out of a few shifts and nearly got fired over it. I barely squeaked in under the limit, and if I hadn't, there was pretty much no way I would have been able to continue school. It's not like I could suddenly afford it now that I made $35,001 vs $34,999. I have never understood why things like this don't use some sort of sliding scale, rather than absolute dividing line.
At least in the government, there should be a law that any hypothetical scenario where someone making more money before government taxes/incentives would cause them to earn less after, must be quickly resolved by replacing hard cutoffs with gradients.
No benefits should apply 100% for anyone making under a certain amount and 0% for anyone making over. Instead there should be a range they slowly decrease, so that if you make $1 more before the benefit you still get less than $1 after. Maybe even a lot less, like only $.30. But you should never lose money.
This is obvious. It goes to show how bad beaurocracy and subtle misaligned incentives are that these hard cutoffs ever existed in the first place.
Right, and this is one of the reasons why I support a UBI that replaces most existing welfare programs. Amazingly some people criticize UBI on the grounds that it removes the incentive to work, when it's almost exactly the opposite.
Funnily, I'm okay with people not working if they didn't want to. Most people would end up getting bored doing nothing after a few months and work with what they like to do anyway.
Devil's advocate: the longer you stay away from gainful employment, the more marketable skills you lose. (This is one of the arguments against a minimum wage; that it keeps low-skill and therefore low-pay labor from establishing a foothold in the labor marketplace that would enable them to up-skill over time.) So UBI would incentivize the creation of a permanently unemployable underclass.
I'm OK with people not working if they don't want to, too, as long as those people are OK with subsistence-level living standards. I don't see why able-bodied people who are capable of working but just don't want to should live a comfortable life at the expense of the working taxpayer.
as long as those people are OK with subsistence-level living standards.
I mean, UBI never meant "Extravagant money." It has always meant something akin to "basic standards for survival."
The entire idea from what I understand is that you should be able to survive just fine, not have it pay for your 98" micro OLED :P
the longer you stay away from gainful employment, the more marketable skills you lose.
I sorta relate to this as someone who's been coasting by at my current job for last year or so. But I'm also working to upskill myself actively. You bring a good point but I don't know what teh solution to that would be.
Point taken, Mr. Devil. I even agree, up to a point - and I think this might be a major issue in the immediate introduction of a UBI. The reason why is that the incentives will change but there will be many who have learned the system under different conditions and will not so easily adjust.
I've grown up amongst poverty and while I don't particularly like the term (as it tends to be deployed in aid of demagoguery), there really is a element of 'welfare culture' in effect, and having been on welfare myself (and treated like a prince because bizarrely the system was obviously classist: so Ed you're an out of work indie game dev and you're currently learning something called 'Nim'? "well that's just great then have some money". Go in there as a bricklayer and say you are looking but haven't found any work the past few weeks: here are 20 forms). I was always very impressed on the knowledge these working class labourers would have of the welfare system, because in their situation it really made a difference.
Their attidue was: (and who can blame them) fuck the govt they don't give a shit about me, the more I get / the more I can play the system, the better.
UBI from their perspective would be total victory. No more queuing no more forms or interviews, just free money for ever. But what then?
If the UBI was only sufficient for survival / dignity but not enough for luxury I think the psychological topology chances a lot and what could be previously described as 'getting one over on this enemy' now can only be described as your own failure.
The devil doesn't need volunteer advocates, he can afford plenty paid. But you actually make the case for UBI as a replacement for means-tested welfare and its associated cliffs: “the longer you stay away from gainful employment, the more marketable skills you lose.”
That's one of the main points of UBI as a replacement for means-tested welfare [0]: eliminating the perverse incentives against maximizing outside work and for expending energy into working the system that exists with means-tested welfare that has complex eligibility rules and is rapidly cut with outside income. By making the clawback much slower and starting much higher up the income scale through the tax system, UBI, compared to the status quo, rewards gaining additional income in the labor (or other) market and learning skills other than navigating a welfare system.
There is a reason that UBI—under the name “negative income tax” because of the political valence of taxation on that corner of the political universe—was originally a right-libertarian proposal.
I'm OK with people not working if they don't want to, too, as long as those people are OK with subsistence-level living standards
There's no plausible way a UBI provides anything substantially better than that any time in the near (likely, the lifespan of abyone now living) future, so that shouldn't be a problem.
[0] Perhaps even stronger if UBI is also seen as a (partial or full) replacement for the minimum wage, which could be justified because, unlike means-trsted welfare, it doesn't tail off with income and provides a basic support level for all—there is then no reason that employment must also serve that minimal support purpose, which makes it possible to offer employment whose marginal value to the employer is less than would minimally support an employee, but which would still be positive (and in some cases still have more long-term value to the employee because of experience that could contribute to more valuable future employment.)
I'm early-retired and all I can say is that it didn't work that way for me. I do have more time, but I'm not so bored that I want to tie up my schedule. I'll come up with a project I can do at my own pace.
It's sort of like telling yourself that you'll go back to school. Some people do, but most don't.
I'll come up with a project I can do at my own pace.
Right, but wouldn't that be similar? Obviously there are going to be people who are going to say "screw it, I'm going to live like this" on a basic survival-wage UBI, but I doubt a majority would want to.
I wouldn't expect a small but steady income to be enough all by itself, but it will put people closer to retiring. When combined with some savings, I'd expect some people would choose to retire earlier than they would if they didn't have it.
I do support UBI, but I also expect that it would have complicated effects.
But, "what they like to do" isn't necessarily anything that will make billionaires more money.
Is UBI the same as a negative income tax that Milton Friedman advocated for?
The most common variant is for (effectively) every adult citizen to receive a fixed "tax refund" amount.
This is paid for by a combination of: replacing existing welfare with UBI, retrenching the bureaucrats that used to implement those complex welfare programs, and increasing the percentage of income tax paid.
There's some threshold where you might pay extra $20K on your income, but you get a flat $20K back as UBI, so you don't notice any change. This is typically somewhere in the middle class. Everyone poorer than this gets a boost to their income and/or have their existing welfare (and associated requirements!) replaced by an unconditional payment.
Everyone richer pays more tax, but not a huge amount more, since UBI mostly replaces existing welfare. It isn't an entirely new type of welfare on top of existing welfare -- this is the strawman that the right-wing likes to use in debates.
It all comes back to the fact that government is a low accountability sector, despite what many people seem to think.
What is the point of saying something like this? Would you prefer that people just not bother to do anything and let poor people starve to death instead?
It's important to deal with reality as it is. Perhaps government is not always the best way to prevent poor people from starving to death.
If we anticipate the private or nonprofit providers might perform poverty alleviation more optimally, we
(1) massively duplicate fixed costs for logistics
(2) ignore that a primary reason governments exist at all is to help prevent people from starving to death, despite it often being hijacked by powermongers
Just gotta say, that's a pretty extreme position to take.
The private charities that fill the gaps left open by government are another form of government, just not democratically elected.
(I realized I was contributing to that problem by donating to local charities.)
The "starve the beast" propaganda has been wildly successful and is seeded deep in American culture and psyche.
"Vote for me and I'll show you how bad I can make government" has been supremely effective, somehow
Republicans want to cut funding to programs, then point at how bad the underfunded program is doing, thus demanding more cuts. Either the result is the department is killed, or is on a shoestring budget and everyone hates them. Many were welcomed departments doing good works. People eventually tire of chronically underfunded gov depts, and vote the other side.
Democrats want more taxes, which inevitable come from middle class, not being able to get it from the poor or rich. Then they set laws in those programs as "means testing", where the poor get the benefits, and the middle class doesn't. The rich never needed it. The middle class tire of paying for everything and getting nothing, and vote the other side.
And, that pendulum swings back and forth.
And that's how we get this horrible ass-backward system we have. And going back to first principles and doing is right is "against the other side!".
That won't change until there is wide enough demand to change it. Broad recognition will come long before the changes.
This is why people don't want to pay taxes at all
Replace one number (the cutoff) with two (the start and end of sliding part).
At least in the government, there should be a law that any hypothetical scenario where someone making more money before government taxes/incentives would cause them to earn less after, must be quickly resolved by replacing hard cutoffs with gradients.
Multiple programs, offered by different jurisdictions, with overlapping populations, each with sliding scale benefits that reduce less than $1 of benefit for each $ of income, still can (and do) end up with beneficiaries losing in net with additional income. But instead of doing so at particular cliff points associated with each program, they do so continually over a wide range. You replace a series of cliffs with a slide.
These kinds of anti patterns are quite intentional and meant to drum up resentment for government programs for all sides of the argument.
It's generally believed that this is caused by a discontinuity in youth sports:
2. Within a given year, older kids are stronger, faster, etc., and perform better
I've seen a few youth ice hockey games and by god it's just unfair; there's a kid like a foot taller than the rest. I'm kind of surprised there isn't some system that buckets kids by size , it can't be fun for the small kids to get elbowed in the neck every time they bump the tall guy.
If you've ever played Nintendo's Ice Hockey (1988), it's super realistic, and the tradeoffs of big vs little are clear: little guys bounce off of big guys and big guys move slow.
My kid is in 12U youth hockey and is a big guy, and yeah, smaller kids can often usually skate around him, but if they bump into him, they fall over, and often he'll get a "big kid penalty" which means he gets a break in the penalty box for the crime of being tall and physically near a smaller player who fell over. We had to do a bit of coaching on how to make (allowed) physical contact so it reasonable contact doesn't look like prohibited contact (mostly be sure to have hands off when kids are falling, it's real easy to look like cross checking when it was actually just incidental contact).
Some of the littler kids seem to have a lot of fun getting away with a lot more physical play than he can. Although he says he enjoys it when a small kid gets mad at him and tries to knock him over, too. So at least so far, seems like everyone is having fun.
I don't think you can really just bucket kids by size and ignore age though... there's a lot of mental development between 10U hockey and 12U hockey, and putting a big 10 year old on the 12U team is often not right because the level of play is so much different, most 10 year olds won't keep up. At the same time, a small 12 year old on the 10U team is going to have a big advantage from age.
Around here we do have two different leagues, one for 'recreational' teams and one for 'reputation' teams, and you more or less have to demonstrate a decent amount of skill to get on the rep team, and then you're playing with much better teams. All the teams are composed of a mix of big and small kids though.
Edit to add: All that said, I think bucketing kids by age makes sense and I agree that there can be advantage to being at the extremes of the cohort. Since the US school system usually has a different cutoff date (september-ish) than US youth hockey (jan 1), you might see different results where there's grade level based high school hockey and age based youth hockey... but not in Canada where the cutoff is Jan 1 for both.
> I don't think you can really just bucket kids by size and ignore age though... there's a lot of mental development between 10U hockey and 12U hockey, and putting a big 10 year old on the 12U team is often not right because the level of play is so much different, most 10 year olds won't keep up.
A friend of mine has a son who is giant for his age. The kid is 7 but he's the size of a late middle-schooler.
One of the things that ends up being really difficult for him is that everyone around him assumes that he should be smarter and more mature than he is. They inadvertently expect him to be mentally the same age as kids the same size as him. It sucks because it makes him seem developmentally disabled or emotionally unregulated. He's not! He's a totally normal seven-year-old. Just a really tall one.
Yeah, we definitely get/got a lot of that. At his current size/age, it's not so bad, but it was definitely a bigger deal when he was a newborn that looked like 2 months old (delivery nurses didn't understand why we were in their ward), and a preschooler who looks older, where there's a lot of development happening in a short amount of time.
I think you could bucket by age but have the ability to move kids around.
The problem is that these youth sports can get very competitive, and then people will be tempted to move the bigger kids down to get an advantage.
At least in USA Hockey, it's not too hard to get approval for kids to 'play up', our 12U team this year had 3 kids that were under age by one year. Getting approval to 'play down' is a lot harder. Our competitive league rules say (sorry for caps) "HAVING 10U PLAYERS PLAYING UP AT 12U IS STRONGLY DISCOURAGED, BUT OCCASIONALLY THERE ARE COMPELLING REASONS TO DO SO. EACH ASSOCIATION AT THEIR DISCRETION MAY ALLOW UP TO TWO 10U PLAYERS PER SEASON TO PLAY UP AT THE 12U DIVISION." And further players are on a case by case basis, determined by a league coordinator from the opposite side of the state.
USA Hockey rules don't permit playing down unless a doctor says it's medically necessary, but then they're not allowed to play on competitive teams. Simply being small or unskilled is specifically not an acceptable reason. [1]
IMHO: playing up is pretty easy to administer, but playing down would be very hard to administer fairly for competitive teams, so it's just flat out prohibited.
Edit for further thought: If you have enough participants, it might make sense to try running Jan 1 leagues and Jul 1 leagues and see if it makes sense to go to quarterly leagues too. Or maybe agitate to change the cutoff for Spring Hockey and see how that looks?
[1] https://www.sedistrict.org/page/show/834907-playing-up-down
I remember playing basketball as a kid and being very entertained beating kids that were much taller than I was. Sure, they had the height, but they lacked so many fundamental skills and sometimes it was clear they didn't think they had to work very hard or do practice drills because they were tall.
Fun fact, the ball and hoop don't care about any of that. It lets me steal it from you and it lets me put it into the hoop. The scorekeepers even add two to the scoreboard!
Fun fact, the ball and hoop don't care about any of that.
Tangent: I grew up around a high school basketball coach and saw that all of the adults knew exactly who was going to college in which sport, and usually by late jr. high. We'd go to games just because he said some kid on the visiting team was going pro and that's exactly what happened.
Can you expound more? How did this work across different fields of sport? I assume a basketball scout can recognize talent early in their domain but how is it crossing sports?
We're talking about people dedicated to the idea of "sport" in general getting excited about kids in local communities who are already talented and driven enough to be twice as good as their peers. Sports scouts follow up on phone calls more than they discover talent hidden away in the cornfield, if you see what I mean.
I noticed the same in Ontario, any kids who weren’t born in the first few months of the year had a huge disadvantage.
Haha, I recall seeing a similar plot with a "suspicious discontinuity" when I looked up data on home appraisal price vs sale price. I remember asking the loan officer why the contract was forwarded to the appraiser before they did the appraisal, because that might bias their assessment. She gave me a funny look and replied "that's kind of the point."
Yeah of course, the appraiser is a person who is paid to write down the predetermined number. The US federal government should nuke this industry as part of their crackdown on "junk fees". Either the appraiser serves a legitimate arms-length purpose or their whole line of business should go away.
I could see a third option as a "lemon detector". That is, instead of their output being a number, it would be a binary, intended only to limit downside risk in the worst cases.
I think in practice this is indeed the role they play. If I'm "overpaying" by 20%, the appraiser will probably still "write down the predetermined number", but if I'm overpaying by 100% and taking out a mortgage to do it, there's a pretty good chance that the bank's appraiser is going to sink that deal.
That's basically what they do, they're not to find the actual value of the property (that's more properly a tax assessor, perhaps) - they are there to make sure the valuation is "in the ballpark" to what it would liquidate for.
An appraiser will never get in trouble if a bank forecloses on a $500k property and it sells for $450k or so, but they will get in trouble if the $500k property only sells for $200k - they'd need to explain why.
I think it's really a problem of different incentives.
Somebody (A) at the bank does not want to give out loans that are well beyond a properties value.
Somebody (B) _else_ at the bank is actually the one giving you the loan and makes money from you getting it.
So A requires B to have an appraiser so they can't completely run away writing loans. From talking to some real estate agents, the appraiser will only fudge so much for you. An appraiser might agree that the house is worth 750k even if they actually think its 699k but if you try to get a 700k loan for a 350k house they'll write down 350k in their appraisal.
--
IIRC, the government's crack down on "junk fees" is mostly that you can't advertise a price and then inflate it later with fees. So as long as the bank states that they require an appraiser and their in-house cost is $X; it doesn't count as a junk fee. But if the bank says that the loan is going to cost say $5k in overhead and then later says it doesn't include appraisal fee then it be a junk fee.
An appraiser might agree that the house is worth 750k even if they actually think its 699k but if you try to get a 700k loan for a 350k house they'll write down 350k in their appraisal.
This is kind of the point. The appraiser isn't trying to find the "true value" of the house, otherwise buyers would hire appraisers prior to even offering a bid.
The question that the bank wants answered is, "is this house sufficiently matched to loan amount such that if the borrower defaults, the house can be sold for enough money to recoup the loan?"
And if the answer is "yes", then they write down the number.
Appraisals function as a major fraud reducer, especially for internal fraud.
Appraisers will fudge $100k on the value of a $1m house because that's their opinion as an appraiser. They won't fudge $1m on the exact same house (2x value).
That serves as a kind of cap on funny business to some extent. 10% of the value isn't going to make that much difference on the ability to pay for most borrowers so an excess $100k in the valuation doesn't really matter anyway. As long as appraisals don't get too out of line they serve their purpose.
Semi-related: the time an appraiser raised the estimated value after the couple removed all traces of the place being inhabited by black people:
https://www.firstcoastnews.com/article/news/local/jacksonvil...
Reddit /r/nottheonion discussion: https://old.reddit.com/r/nottheonion/comments/igk83g/jackson...
Appraisals are such a joke. We had an appraiser say that my new construction was going to appraise at $100k under cost -- so my broker fired him, ate the fee, and hired an old friend of his instead. She gave us the number we needed and the deal closed.
Then again, the finished house then appraised at $50k _over_ cost 12 months later when I converted the construction loan, so maybe the first appraiser really was nuts.
When I was selling, I must've gotten the only appraiser in the world that actually appraises rather than just follows the contract. Idiot lost me $15k on my house.
But yeah, it's _very_ clear their appraisal, which is usually _dead on_ with the offer, is a sham. I mean, even just considering the incentive structure (Who's going to hire an appraiser who causes deals to go sideways?), it's clear that they're just a middleman taking their cut.
If you are upset about somebody not wanting to take that $50k a year job because it would cost them a subsidy, just wait until you hear about trust funds and inheritance!!
If you think losing a $20k subsidy is demotivating, imagine inheriting $25 million.
So instead of knuckling down and working hard to contribute their fair share, they are incentivized to just loaf. No telling the costs to society from these freeloaders.
- Trust fund babies are far more rare than people making ~$50k
- Trust fund babies will not qualify for much government assistance
It is a net good for the economy and the individual if a person who is capable of making ~$50k does so within the workforce, rather than avoid improving their own life in order to qualify for assistance.
This is not a moralization of the use of government assistance, it is a criticism of the incentive structures within those assistance programs.
It is a net good for the economy [for individuals to improve their lives]
I agree. If you've just inherited $25 million, it would still be better for you and for society for you to get a job--even a job paying $50k a year if that is all you could get.
But...are you going to be incentivized to do so?
If you care about somebody not wanting to make $50k because they'd lose a $10k subsidy, how much MORE should you care about a $25 million subsidy disincentivizing somebody to improve themselves and contribute to society as a productive citizen.
Trust fund babies are far more rare than people making ~$50k
That just means that imposing enough inheritance tax to incentivize them to work wouldn't effect enough people to have a negative effect on the economy. And lets not forget, the person being taxed is dead. They will feel absolutely no ill effects from the tax. Its all upside.
Not Trolling here. I advocate a 100% inheritance tax, the proceeds of which should be dedicated to education, nutrition, and housing for the next generation, to achieve the following goal: Equal ability should be given equal opportunity to succeed.
And just giving free money to one kid and nothing to another is the absolute diametrical opposite of that.
I advocate a 100% inheritance tax
What sort of nonsense half-measure is this? I propose a 100% tax on parent-child resource transfers starting from the moment of birth!
Although, you might just cut out the middleman, seize the children, and raise them in a state-run "Nurturing Center."
seize the children, and raise them in a state-run "Nurturing Center."
I don't know a parent who hasn't fantasized about this. I hadn't considered the inheritance angle; my kid's young yet.
I enjoy a gaming science fiction universe with such "Clanners".
Fun stories do not necessarily make for fun real life experiences I imagine.
Why would anyone with above-median ability to acquire resources stay in such a country
Why would anybody with above-median ability to acquire resources NOT want to live in a society where equal ability always means equal opportunity??
- The government created an incentive structure keeping people on government benefits from being productive members of the economy. It should fix that.
- There is still a question of scale: the trust-fund-baby population is several orders of magnitude smaller than the makes-50k population
I advocate a 100% inheritance tax
Well then I don't think there is much common ground between us :) A 100% inheritance tax severely dis-incentivizes savings and investment, cutting off capital to the businesses that have created so much value over the last century.
Coding hard cut-offs like this into legislation, regulation or policies seems crazy almost to the point of negligence, incompetence or malice. Especially when it's so obvious such cliffs will incentivize behavior certain to cause negative or perverse outcomes. It's even more incomprehensible when implementing graduated thresholds is so well understood.
A related common failure mode is baking in fixed, absolute thresholds for dynamic domains sure to evolve instead of linking thresholds to dynamic metrics (such as inflation, cost of living, etc).
It's often said that the cruelty is the point.
If it were, why would they offer welfare programs at all? Surely an "indolence tax" assessed on anyone with income below a certain threshold would be more cruel.
What do you think poor people would do if there were no welfare programs?
This is what I find perplexing.
Welfare programs are not for the poor.
They are so the poor doesn't "eat the rich".
(For those playing at home this is a slogan tossed around with connotations of society wide rebellion - which would not be a comfortable outcome for rich people.)
Don’t give them any ideas. Roughly half of US politicians would probably support that. Without constitutional safeguards, a shocking number of them would support turning their opponents into Soylent Green.
It's frankly amazing that we still have welfare, social security, etc., at all. The pro-cruelty folks have been diligently working to discredit them since FDR enacted them during the great depression.
This unthinking encoding of thresholds feels like a 'Systems' problem that percolates into almost every part of life, whether its income brackets or hard limits on how many books you can borrow from the library. Some make more sense than others, just out of the sheer complexity and cost of implementing continuous (e.g. tapering) systems in the real world.
A particularly troublesome example I encountered, entirely unrelated to finance, was when working on a renal ward in hospital, we had to count respiration rate and input it into the obs machine, but if you inputted over 16, it would increase their sepsis score (or "acute deterioration"), meaning there'd be additional work to be done. It was rarely the case that they were actually producing symptoms of sepsis, but because of the hard threshold, to my horror, nurses would often just enter 16 on the mark, and juniors like me were told to do the same.
I'm sure there are literally tonnes of examples of these discontinuities and the bad incentives they produce across every industry and government function. In addition to laziness and inertia, I feel a general problem is that lack of curve/distribution/continuous-thinking in our schooling, as opposed to the easier discrete thinking.
All systems are fundamentally analog in nature. If only we just taught things this way...
How can it be blamed to negligence? It's not like these disincentives and dangerous gotchas are not obvious when these rules are written?
A similar fun example is the distribution of Elo ratings on a chess site, e.g. here's the weekly distribution on Lichess for Bullet games (less than 3 minutes):
https://lichess.org/stat/rating/distribution/bullet
It's easy to understand why this happens:
- Player ratings will fluctuate by small amounts as they win and lose individual games.
- People are happy to stop playing when their rating is at e.g. 1503, but if it's 1497, they'd rather play just one more game than leave it that way.
- At any given time, most accounts are not playing, so the distribution shows a bias towards values just over a 100 Elo threshold.
The other neat thing is that you can see this effect reduce as you look at longer time controls:
Blitz (less than 10 min): https://lichess.org/stat/rating/distribution/blitz
Rapid (less than 30 min): https://lichess.org/stat/rating/distribution/rapid
Which makes sense because the time and effort of gambling just one more game to get the rating back over the line is higher at the longer time controls.
At any given time, most accounts are not playing, so the distribution shows a bias towards values just over a 100 Elo threshold
FYI, that graph only includes players who were active (played a game) this week.
Yes, but that doesn't change the fact that out of all the accounts included, most of them won't be actively playing games right now.
In fact none of them will be, because it's computed by analyzing the rolling last 7 days, and each accounts "ranking" is whatever their ranking was at the end of that period (i.e. "now," more or less).
Basically I'm not sure why you're saying that leads to a bias toward "slightly above 100."
Ohh... unless you meant slightly above a multiple of 100. I see now. Because people stop playing when they hit a milestone, right.
Haha, guilty. I put my rapid rating above 2k and haven't played in months since then.
When I dip below 600, I usually get angry and play more, then lose and quit even further down.
Or you can look at the cut off date of competitive sports players and athletes. If January 1st is the cut off for age there will be a disproportionate number of players born in December. If it's June 1st many of the players will have birthdates in May and April.
(That’s basically how the election falsification example in TFA works, too: a lot of individuals targeting a subjectively nice metric without cooperating with one another.)
Similar to car prices, we see the same mental rounding effect in rents. People will rent a home for $2100 or $2200, sometimes even $2150 for those truly dedicated to price finding, but hardly anyone rents an apartment for $2137.
Source: my data for the city of Berkeley https://observablehq.com/@jwb/berkeley-rent-board-data#cell-...
You might get some of that if rent is raised by percentage. When I started my current job my salary was an integer multiple of $10,000. I got a raise at the end of my first year that was an integer percentage (3%, IIRC) so my salary was then an integer multiple of $100. The following year I got a raise again (it might have been an integer percentage, I don't recall) and my salary was just some random-looking integer.
Rent-controlled Berkeley apartments are allowed to increase rent by some fixed percentage, so maybe you can see this in your data? But I don't think the math would work out so cleanly.
Very true, but the graph I posted is initial leases only.
I see you said that in your link. Maybe I should read more carefully before making comments.
Reading any part of it launches you into the top percentile already.
The car pricing seems to be that some amount of people round 79,999 down to 70,000 when determining mileage and so cars with 79,999km on the odometer are penalised much less than cars with 80,000km.
I think the rent one is much more driven by "some landlords like round numbers for posting ads/doing their finances".
The "round prices" is definitely a factor, the math may say to rent for $2134 but the landlord will either round that down to $2100 or up to $2200.
And unless increases are limited by some law, they will usually only raise it by even amounts.
This is the same reason grocery store prices are $x.99, people anchor on the first digit and $5.99 feels like a lot less than $6.00
One reason people were looking for ways to lose money was that, in the U.S., there's a hard income cutoff for a health insurance subsidy at $48,560 for individuals (higher for larger households; $100,400 for a family of four). ... That means if an individual buying ACA insurance was going to earn $55k, they'd be better off reducing their income by $6440 and getting under the $48,560 subsidy ceiling than they are earning $55k.
I had the opposite problem for the 2022 tax year: I turned out that, with investment losses and no earned income, my adjusted income was below the poverty line, which ... means your ACA healthcare subsidy is cut off entirely!
https://www.irs.gov/affordable-care-act/individuals-and-fami...
The "logic" there (from reading discussions of the cutoff) is that, "well, if you're below the poverty line, you should be on Medicaid and not on the ACA exchanges at all, silly!" Okay, but if you have wildly varying income, and a high income from previous years, you don't know that you'll be "in poverty" this year, and won't qualify because of the past year.
I was tempted to update my taxes to claim phantom income from my imaginary cash-based business, which would then get me the subsidy, but that feels ick.
(Which, I know, being retired on crypto, I also feel ick about taking the subsidies to begin with, but that's a different issue.)
I would consider just taking the medicaid for a year.
Medicaid can actually be very good quality healthcare, if you're located say, near a very good research hospital in a city with a structural oversupply of medical care due to having a lot of med schools.
I'd rather have medicaid living next to a high quality (non profit) health system, than "nice" insurance living in a shithole. All the insurance in the world can't materialize doctors that aren't there
I would consider just taking the Medicaid for a year.
ACA subsidy eligibility may be annual, but Medicaid eligibility is based on current monthly income, and if you have a change that makes you ineligible, you lose it. You can’t just decide to “take Medicaid for a year” because you aren’t subsidy-eligible based on prior-year income.
So? Isn't losing medicaid an ACA qualifying event? Your income goes up, you lose the medicaid but now qualify for ACA.
That said, in my secondhand experience across multiple states I won't name, the medicaid office probably won't actually find out or do anything before 12 months are up.
Also, a few states are starting to officially enact "continuous eligibility" and intentionally not check your income for 12 months -- mostly for children[1] right now, but some states for adults[2] too.
[1] https://www.medicaid.gov/medicaid/enrollment-strategies/cont...
[2] https://www.commonwealthfund.org/publications/issue-briefs/2...
ACA subsidy eligibility is not annual. "Income changed" is a qualifying event.
The "logic" there (from reading discussions of the cutoff) is that, "well, if you're below the poverty line, you should be on Medicaid and not on the ACA exchanges at all, silly!" Okay, but if you have wildly varying income, and a high income from previous years, you don't know that you'll be "in poverty" this year, and won't qualify because of the past year.
This wasn't setup this way because it was thought to be a good design, but as a political compromise. At the time, it was seen as important to keep the headline cost of the bill below some arbitrary threshold and for it to be revenue neutral (the wisdom of this is questionable in hindsight since the moderate Dems that supported the bill mostly got wiped out anyway and it never got any Republican support). Medicaid is cheaper for the government than ACA subsidies (at least for low income people given the way the subsidies are structured), partly because the government has a lot of negotiating power and partly because Medicaid is stingy.
This was made worse when the Supreme Court ruled that the federal government couldn't make receiving existing Medicaid funding conditional on Medicaid expansion (Medicaid is partially funded by the federal government, but the program is administered by individual states) so whether the Medicaid expansion is even available to you largely depends on whether your state is run by Democrats or Republicans (with a few notable exceptions).
People like me are an extreme edge case, I doubt this was a big factor in any debate.
A reminder to anyone reading that there is no actual "opposite problem" to yours (which I'm very disturbed to hear about, hope things work out).
For now, there is no income level cut off for ACA premium subsidies, just a limit that says you should never spend more than 8.3% of your AGI (more or less) on health insurance (more or less).
This may change next year and/or in the future.
A friend of mine from a farming family in Europe once told me a story that his family would wait until the year one of his siblings was due to go to college and then invest in new farm machinery. Their reported net income for the year would reduce or go negative and the sibling would get to college effectively for free on a hardship tuition grant.
At least in America, they usually look at the past 2-5 years of income to avoid these types of shenanigans.
In Canada, they use gross income instead of net income for student grants.
So, what happens if you work in an area where the cost are high but the margin is low? You might make $100K but have $85K in costs. You still have $15K in income. Does this apply to those self employed or only wage earners (gets a paycheck)?
In Austria, we just don't have tuition fees, which also avoids these types of shenanigans :)
Huh? Wouldn't they have to depreciate it over several years so only a fraction of it would be a deduction in the current? Or is the idea that they'd buy so much capital equipment that even the fraction they could depreciate that year would wipe out all the other income?
AIUI, the concept of depreciation exists in tax law precisely to prevent indefinitely deferring taxes via reinvestment (though it can't do anything about the portion of reinvestment going to pay salaries a la Amazon):
Many countries allow accelerated deprecation of designated equipment.
Here's the IRS's - https://www.irs.gov/newsroom/additional-first-year-depreciat...
Yep very common tactic for small business owning families.
The following histograms of Russian elections across polling stations shows curious spikes in turnout and results at nice, round, numbers (e.g., 95%) starting around 2004. This appears to indicate that there's election fraud via fabricated results
Two observations: 1. Why from 2004? Things were much worse in Russia before 2004. 2. The numbers of this election seem to agree with approval rating polls conducted by western agencies.
By 2004, a former KGB spook was in power long enough to introduce a falsification system.
The 1990s were worse economically in Russia, but Yeltsin was a relatively liberal politician and possibly didn't want to falsify elections.
I am not sure. Yeltsin was “our guy”. He was feted by us, he even addressed the congress, etc. Until he was not when he refused to deliver Russia on a plate.
Guys that are not “our guys” never win a legitimate election. Remember how integrity of elections were questioned when a guy that is not our guy won an election in 2016?
I am far from sure either, but Yeltsin had some "street cred" speaking for him. I remember the 1990s quite well, being a teenager with intense interest in politics.
He got to power by organizing a folk uprising against an attempted coup by KGB generals Kryuchkov et al., who were hardliners and quite skilled people as well; they caught Gorbachev and held him hostage.
https://en.wikipedia.org/wiki/1991_Soviet_coup_attempt
That coup could very well succeed and that would mean death for Yeltsin, possibly after a torture session in Lubyanka. He certainly demonstrated personal courage there.
What followed was "too free Russia". As in, lawless. It had certain advantages. For the first time in Russian history ever, multiple independent media sprang from the ground and journalists would criticize and attack powerful figures in a way that they no longer can; we're used to it, but open media criticism of powerful people is actually not that typical in the world. But at the same time, crooks stole everything and the regular Russian suffered. As a nasty consequence, democracy and freedom became one with poverty and corruption in minds of many Russians.
Yeltsin only contested one election, in 1996. His opponent Zyuganov was a classical communist. The result was 54.40% for Yeltsin and 40.73% for Zyuganov. Was this election clean? How can I know? But it wasn't a travesty with 90 per cent for The Leader and paper figures for "opponents"; Zyuganov was a real politician with a competing party and a very different program, and he got 40 per cent of the vote, and nobody fell out of the window etc.
Everything is relative, and I believe that for the standards of Russia, Yeltsin was by far the most liberal leader in its history.
Good points.
It didn’t matter that Yeltsin was the most liberal of all. He did not roll over and play dead for NATO expansion and balkanisation projects. So he became a pariah overnight and was painted as an alcoholic and corrupt.
2004 was the first election after the dictator took office and decided he would never leave. (He pretended to leave once, installing a puppet for 1 term, due to Constitutional limits. When he officially returned, he amended the Constitution to make himself dictator for life.) He's still dictator 20 years later.
The worst one of these that affected me was money helping people in the 2008 housing crisis. qualifying was based on what percentage of your income your mortgage payment was. So I would have got it if I had made a little less money, or if i had bought a house I knew I couldn’t afford. It felt like being punished for making the right decisions.
So... people who'd been misled into making bad decisions and were being given help because they really needed it, made you feel like you were being punished by not getting similar help you didn't really need because you were making OK money and had avoided making the same kind of mistake?
IMO, that's a really glass-half-empty way of looking at the situation.
You did good! Try to give yourself a break. People like you who didn't fall for the sleazy mortgage brokers helped limit the damage that the rest of society had to deal with. And maybe next time some society-wide con goes down, if you (or someone you love) is unlucky enough to get stung by it (because none of us are smart enough to spot the con-men 100% of the time), hopefully you (or they) will get the help that's available that time around when it is really needed.
It's definitely both a glass-half-empty way of looking at things, and also true. I think the point is that the people who did the right thing ended up, at the end, with smaller houses and the same money.
I forgot to mention that because of the crash I was underwater on the house and couldn’t afford to sell it even though I wanted to.
It was also something silly like the article, where if I made like $5k less annually I would have qualified for much more than that. I was struggling at the time and really could have used it.
This is like saying, "If only my house had been destroyed by a hurricane too, and then I would have qualified for that sweet FEMA money."
I mean, sure, but you were still better off to not have your house destroyed in the first place.
No, his house was just as "destroyed" as everyone else's. It's like complaining that after his house was destroyed by the same hurricane that hit the rest of the neighborhood, FEMA made him, but only him, ineligible for assistance.
Also UK VAT. Companies only need to register for VAT when they turn over more than £85,000 in a year. This adds a great deal of extra complexity for running the company. Predictably a lot of companies earn just less than this amount. The graph is worth a thousand words:
https://www.economist.com/cdn-cgi/image/width=1024,quality=8... (from https://www.economist.com/britain/2023/04/11/britains-tax-ta...)
One similar thing is getting a 1099-MISC for 'side work' in the USA
For example, I'll do some hands-on work for a former employer. Rack some network equipment, go investigate something, install some hardware...They take it from there, I can bill a couple hours and it's a nice dinner for my wife and I.
However, if I hit a certain threshold ($600?), they will send me a tax form and I'll then have to pay income tax on that money.
However, if I hit a certain threshold ($600?), they will send me a tax form and I’ll then have to pay income tax on that money.
No, the threshold at which you have to include the income in your taxable income ($400/yr) is lower than the threshold for the person paying you to provide a 1099-MISC ($600/yr from that payer.)
The threshold at which you have to include the income in your taxable income is $0.01.
Don't you always have to include the income even if you don't get 1099'd?
The $400 is only if it's your only income, otherwise plumbers could always charge $399 a visit and never pay tax.
Marginal rate discontinuities in the UK income tax system [0] are driving highly undesirable (from the taxman's point of view) behaviour. The increase in marginal tax rate from £100K p.a. upwards has already led to:
- doctors going part-time to keep their income below £100K, in the middle of a shortage of doctors across the health system
- employees turning down promotions because with the combined effects of income tax, student loan repayments and loss of childcare subsidy the effective marginal rate of income tax between £100K and £117K is > 100% (!)
- single high earners (core voters of the present government) effectively subsidising families of middling earners (the opposition's core voters) because the discontinuities apply to single person's income, not combined household income
The behaviour changes are simple first order effects. The second order effects on public service workforce availability and overall tax take were also highly predictable.
[0] https://www.telegraph.co.uk/multimedia/archive/03270/tax_327...
If I understand the linked chart, there are discontinuities in the marginal tax rate, not the effective tax rate. So in that case yeah at certain levels the amount you owe on each additional dollar goes up, but that would not mean that making 105k is worse than 100k unless the marginal tax rate is greater than 100%.
This ignores stuff like losing childcare subsidies that is likely not included on the graph.
In the us you hear stories of people decreasing their income to be in a lower tax bracket and often it is due to them not understanding that the tax brackets are for marginal tax rates.
If I understand the linked chart, there are discontinuities in the <i>marginal</i> tax rate, not the effective tax rate.
True, but they are harsh discontinuities, sufficiently so to have the effects I described. And yes, there is a common combination of personal circumstances (high income plus student loan repayments plus child care subsidies) which means that any gross salary between £100K and £117K means less net income than being on £99,999 gross. I've not been able find a graph for that, but the maths checks out.
The result of this particular combination is to effectively impose a ceiling on many employees at £100K gross, because they would have to receive a greater than 17% pay rise to be better off than before.
But these tax rates are all under the current government, why would single high earners vote for it?
We had something like this when we were on ACA one year. I hadn't been working that year, but I ended up getting a job in August and it looked like we were going to go over the income threshold because we have a rental and were getting rental income. I asked the renters to please not pay their rent for Sept-December until January of the next year. They happily complied. We were able to squeak under the threshold, but it was close.
I guess you were taxed on cash accounting not accrual?
Individual income taxes in the US are usually cash basis (it is poasible to change to accrual, but from what I understand it almost never makes sense for an individual to do so.)
And only individual income taxes would be directly relevant to individual ACA subsidy eligibility.
Didn't receive the income for 4 months of rent until January of the next year. Reported the income in the year it was received. Isn't that generally how it works? (not an accountant or a tax expert)
It's too bad income "cut-offs" even exist. Shouldn't it always be a smooth function?
It depends on public opinion. In some countries people think, taxes must be equal for all, or linearly grow (and with ideally smooth function).
They even sometimes change mind and make experiment with other function.
Many experts think, this is because in these countries, laws made entities tax agents (every entity pay all taxes for all hired people), so people just don't bother how many taxes they pay, and how much time spent to calculate all these things and to fill all papers.
Smooth - definitely not. Continuous - yes. (SCNR.)
I was all excited when I saw on Zillow a decent new apartment complex in town with rents that were actually reasonable... until, after hours of studying photos and floorplans and neighborhood, I noticed a statement on Zillow, near the bottom of the scroll, in one of the tabs in right column, that the building is subsidized, and there's a permissible income range.
While some of us could qualify while on early startup salaries, I don't know how I'd feel about subsidies as a techbro, and I know I wouldn't feel good about having to move from a nice building (big time investment, moving monetary cost, and quite possibly moving to a crappier building) because the startup was doing OK.
I was disappointed, but not surprised. As a middle-class techbro, this is a very lite version of a much bigger problem that has affected many low-income people. News has long had stories about low-income people who are trapped with subsidies they need (housing, food, support for children, etc.). They make a lousy wage, and can't afford to get much of a better wage, because the societal safety net on which they depend would be ripped out from under them before they could afford it to.
I know I wouldn't feel good about having to move from a nice building because the startup was doing OK.
Subsidized apartment buildings in the US don't make you move out if your income goes up: they just take away your subsidy, i.e., your rent goes up to what HUD calls the apartment's "contract rent". Then HUD (statistically speaking) directs the money they used to use to subsidize your rent to building more subsidized housing. HUD wants successful people living in HUD-subsidized buildings, at least the ones with children in them, to serve as role models.
Interesting; that sounds enlightened of HUD.
One reason people were looking for ways to lose money was that, in the U.S., there's a hard income cutoff for a health insurance subsidy at $48,560 for individuals (higher for larger households; $100,400 for a family of four). There are a number of factors that can cause the details to vary (age, location, household size, type of plan), but across all circumstances, it wouldn't have been uncommon for an individual going from one side of the cut-off to the other to have their health insurance cost increase by roughly $7200/yr. That means if an individual buying ACA insurance was going to earn $55k, they'd be better off reducing their income by $6440 and getting under the $48,560 subsidy ceiling than they are earning $55k.
Except that in real life there is no /dev/null that you can immediately pipe in exactly $6440 to hit your target.
You have to spend your time in order to achieve this reduction in AGI.
And discontinuities being discontinuous means that the number of people who have the necessary training/experience to confidently achieve this in, say, three hours, is probably in the same ballpark as people who can successfully set up encrypted email in the same amount of time.
For everyone else, it's going to take at least a week's worth of time to plan, double check, execute, triple check, etc. (And realistically double that, or more.)
At 55K, you've already spent that savings in the value of the time you gave up to get the savings.
People often make fun of free software developers for failing to properly value their own time. But at least that's not their domain of expertise. A financial hobbyist spending $2 of their time to save $1 is professional grade irony.
Edit: clarification
The example of buying options given in the article would take literally minutes for anyone with an existing brokerage account.
These aren't financial hobbyists.
At $48,560, these are mostly people who don't have a lot of money relative to their living expenses, and are doing what they need to do in order to not feel totally broke. < $50k in a lot of places was already getting hard to raise a family on, even before Covid, all the moreso if you're paying full price for ACA exchange insurance, which was then and remains now disgustingly expensive.
We have some discontinuities in our tax code in Argentina, if you are an independent worker, and earn up to 11,916,410 pesos ($11,682) per year, you pay 793,332 pesos ($777) in taxes, around 6.6%, but if you earn one more peso, you enter the general regime, and start paying >50% in taxes.
A simple solution (probably used in many places) to this problem is to have brackets. Everybody is taxed 6.6% on its income until a certain threshold and the rest is taxed at 50%. You can add more brackets as needed. And so, there is no incentive to be just bellow a certain bracket threshold.
Is this true? You can't mark cap losses against income to reduce income more than a few thousand. You have to actively make less, not make bad investments.
You can't mark cap losses against income to reduce income more than a few thousand.
You can if a significant part of your income is capital gains.
The author of the marathon paper explains the phenomenon he is observing, and then goes on to "reject that explanation" without attempting to do anything to control for it.
For example, the 2013 Chicago Marathon provided pace teams for 3:00, 3:05, 3:10, 3:15, 3:20, 3:25, 3:30, 3:35, 3:40, 3:45, 3:50, 3:55, 4:00, 4:10, 4:25, 4:30, 4:40, 4:55, 5:00, 5:10, 5:25, and 5:45.T he institution of pace teams then could provide an alternative explanation for the bunching we observe at round numbers.
It would be easy to do, even. Restrict to marathons where the pace team spectrum is known to be of a specific type and see if the other spikes disappear. The author certainly has the data to do this, and isn't. That is suspicious.
There is one more reason for discontinuity around 4:00 - many amateur runners make a goal to run in 4:00 or less (hard but achievable) and reduce training intensity once they finished in 3:5x - 4:00.
There's also Poincare and the Bakery [0], which is quite possibly apocryphal but often told - esentially a departure from the normal disibution showing something odd going on.
I vaguely recall reading that the technique was used in the second world war to catch black marketers; if the distribution of weights of rationed items had a discontinuity near the weight limit, it was evidence that the seller was keeping the heavier portions back for private sales.
[0] https://houstonstatisticians.wordpress.com/2013/01/11/poinca...
However, a tax system that encourages people to lose money, perhaps by funneling it to (on average) much wealthier options traders by buying put options, seems sub-optimal.
In expectation, they're likely not really funneling that much money to options traders. Indeed - if the option pays out, they likely will not have to worry about medicare/healthcare for quite some time.
This article is so straightforward and well articulated to hammer in the main concept: statistics are funky!!
The discontinuities at the used care sale prices graph seems like an arbitrage opportunity on depreciation. Buy right after a round number, sell right before another, pay less on dep.
aside: if you're on Arc browser, I made a boost that adds some styling to Dan's website to make the reading experience just a little better: https://arc.net/boost/80CE9A49-4D0A-48C6-9C53-13BF02696009
“Some other discontinuities are the TANF income limit, the Medicaid income limit, the CHIP income limit for free coverage, and the CHIP income limit for reduced-cost coverage.”
I know more than one person who intentionally keep low, part-time hours for this. One had a good, work ethic when on the job. Just didn’t want to lose those benefits.
Policy makers should definitely weight this into any decisions about reforms.
For those of you that are fans of Jon Bois, he once noted in a video that the statistics for ball placement by an NFL ref is notably skewed towards 5 yard lines.
Because, he thought, refs are human.
(2020), but still interesting.
I remember my deep disquiet at a tax return where my reportable income was exactly 2^n-1 for some integer n, naturally provoking obsessive checking and audit on my part.
I suspect the inconvenience and weirdness of dealing with a hard cut-off is easier than the complexity of dealing with some kind of continuous scale. Laws need to be, first of all, easily comprehensible so that all parties can plan accordingly. It's easy enough to plan to keep your income under $X, but hard to figure out the optimum benefit/income sliding scale and plan accordingly. The only other simple and fair option I can think of would be to implement a "judge" to issue approval on a case-by-case basis instead of a hard number.
h
Thresholds are almost always a bad solution (in engineering or otherwise) - the only advantage I have found for them is that they are usually easier to understand than the alternative.
Related:
Suspicious Discontinuities - https://news.ycombinator.com/item?id=28452926 - Sept 2021 (54 comments)
Suspicious Discontinuities - https://news.ycombinator.com/item?id=22378555 - Feb 2020 (297 comments)
I disagree with the proposed solutions, all way to complex. The thing to do is simply give the subsidy to everyone and make up for it with higher taxes. That is how you achieve more equable outcomes, give fixed subsidies to everyone and recover via proportional taxes.
Instead we end up with a situation where we have arbitrary cutoffs, a large buerocracy just checking for eligibility and often even progressive subsidies (giving more to those with higher incomes)
Specific to the welfare/UBI/public benefits subthread of this (with a digression):
I saw the phrase "middle class solution to lower class problem ['MCSLCP']" applied to stuff like this years ago; that characterisation is possibly not politically correct today. It was discussing various forms of 'credit fine print' --- the ad for "Buy this recliner today, no interest, no payments for three months!!!" ... followed by five lines of fine print at the bottom of the ad (likely double the verbiage of this posting) about need to pay promptly, the upfront fees, etc etc, and the (somewhat usurious) rates and fees payable if the process wasn't followed to the letter.
What makes it 'MCSLCP' is that for a large percentage of the population that would look at this, if you have the time / savvy to assess the deal and make it work, you probably have better credit options available. [1]
It's super easy to comply with the terms if you have a personal organization system ('tickler') that works. Maintaining that system is really tough if you're a single parent/double job trying to keep the ship afloat... and also to have the funds to keep the deal working on the day that the tickler is triggered.
But the 'MCS' of the MCSLCP is, just buy it with the cash-back credit card, and pay the balance in full before the due date. Easy percentage, and you already do that as part of the monthly bill-payment chore.
For the vendor, the deal is a moneymaker since the majority of the takers will not (be able to) comply with the letter of the terms, and the fees and rates become the profit.
The public benefit aspect is that, the space to screw it up and lose the benefits is politically a feature, not a bug. The legislators can paint themselves as guardians of the public purse and the people who blew the cliff as thwarted welfare cheats.
[1] if I could 'ping' patio11 on this... I think some recent posts from 'bits about money' are in the same area as this.
This is one of the many reasons that means tested, rather than universal programs end up producing perverse outcomes. People in countries with universal healthcare, daycare and education do not have to limit their participation or productivity in the real economy in order to access essential services.
I'd bet the race time data looks similar to weight-lifting data for certain thresholds, whether it's the number or plates or such. Goals people set and then they mentally stop themselves at that goal.
During the pandemic, as was the case for many organizations, my employer implemented pay cuts. In the name of fairness, they did it by income so that those with the highest incomes would pay a larger percentage. That sounds good, but they did it with discontinuities.
What upset me was couples with combined salaries far greater than mine but individually a little less so they were just below the cutoff. Their combined cut on considerably more income was less than mine. We were living on one income, and the cuts would have been tough to absorb if not for the stimulus checks.
I love the example with Russian elections! It's impressive that they allow themselves to be that low-effort in their fake results.
Need to add this one here https://twitter.com/martinmbauer/status/1769672126905090386
Another place this shows up is in online chess ratings.
See Lichess: https://lichess.org/stat/rating/distribution/blitz
Couldn't find this in Chess.com stats, but maybe they do some smoothing in their plot.
Okay but can we talk about how beautiful that Polish language exam score histogram is?
I don't think this is a problem about "discontinuity". It's about the monotonicity of the function from income before tax (and insurance, etc.) to income after tax. So I don't think "sharp threshold" is a problem, as long as the law is "if you are making more than this amount, the extra part should be taxed at a higher rate."
From other comments I learn that some laws indeed do not work like this. Really?! That's awful.
It's interesting how the marathon discrepancies mostly disappear at left and right of the curve (looking at 2:30 and 6:30). Presumably top runners are putting out 100% of sustainable effort the whole time so there's no reserve energy and the slowest are similarly doing all they can just to get the race done. The folks in the middle are the ones who are putting in something less than 100%.
The problem is labels, and beyond that political parties. Politicians like labels because the parties depend on labels for branding. They want to use rhetoric to group people, like “poor” or “rich” and the second you do that you create the discontinuity.
Avoiding benefit cliffs requires more than understanding the issue of discontinuities, it requires the reduction of identity politics which neither party is on board with. Parties themselves are labels. They cater to the human desire to simplify and form tribes around those labels.
An instructive image of the welfare trap: https://en.wikipedia.org/wiki/File:Welfare_trap.png
People making $30K on welfare would need to make $81K at an actual job to have the same income after tax.
More info: https://en.wikipedia.org/wiki/Welfare_trap
Something seems very off with that image. I've known a lot of different people who were on welfare over the years, and not one of them had a standard of living anywhere close to what someone who nets $60,000 a year does. That said, there is absolutely a cliff where you could risk a loss just by taking in more money.
The main feature of that image is "childcare" which seems to be a fixed subsidy of $16k (and "CHIP", ~$4k related to child health care).
I don't know what the former means and how these are calculated, but if you don't have children, this graph would look a lot less exciting.
The ones I've known with kids all seem to have it far worse. If they were getting a $16k tax credit or whatever it must not have been making up for the other costs involved with raising children.
Worse than someone who doesn't have to pay raise a kid isn't the same thing as worse than someone else with kids who makes $8000 more and therefore loses the $16,000 credit.
And the cliffs are only half the problem. Did you get a childcare subsidy? Only if you use approved providers, which charge more than your older niece would to watch the kids, and now the money goes to some bureaucratic corporation with lawyers and lobbyists instead of your own family, and you see your niece less often and don't talk to her dad as much and now he's less likely to offer to do you a favor when you need one or realize that you do.
You also get a housing subsidy, but only for particular housing, which isn't as close to your job or doesn't allow you to pool resources with roommates, so now you have to pay more for transportation or most of the subsidy gets eaten by higher rents etc.
The entire welfare system should be vaporized and replaced with a tax credit for the poor (i.e. a UBI).
Yep, call it a negative income tax if it goes down better than UBI, but many other things would be better than the system we have now.
The problem with UBI isn't so much the politics, it's the feasibility of the cost. $12k a year over 300 million people is 80% of the US government's tax revenue.
A negative income tax might work out a lot better on the numbers, but it won't help the people that need it the most (the ones that can't get a job).
But hey, maybe it can work. The US has a deficit spending of $1.7 trillion in 2023, $1.4 in 2022, $2.7 in 2021. That $1.7 would cover almost half of a $12k ubi. But how long could that last?
This is nonsensical for numerous reasons
1. The federal government doesn't have tax revenue. It issues a currency and then taxes go toward countering inflation. The notion that a currency-issuing government needs to "balance its budget" in its own currency is a political fiction. Also, policies that benefit people at the lower end of the income spectrum disproportionately actually move money around in the economy, which generally speaking is less inflationary than allowing it to accumulate in various silos like hedge funds
2. A "negative income tax" doesn't have to require employment. You can make zero dollars in income as a self-employed person, and the self-employed still track their income for taxation purposes
3. There are many unnecessary-to-malicious subsidies and inefficient welfare programs that could easily have their rationale subsumed by UBI, and doing so would save considerable cost that is mostly the overhead of all the means-testing personnel and in some cases (like SNAP) completely separate financial machinery necessary to maintain them
Even setting all that aside, you could make considerably more "tax revenue" by funding the IRS or reversing some of the nakedly corrupt corporate tax breaks that have been created over the last several decades. There always seems to be more money to subsidize artificially lowering the price of certain goods, fund incredibly inefficient private government contractors to do things that once cost considerably less for the government to do itself, fund drug research only to then allow the resulting breakthroughs to be patented by a private firm and then gouge people for treatment, or buy ludicrously expensive weapons for militarized police forces, but propose anything that actually benefits people and suddenly everyone's worried about the costs.
Not to put too fine a point on it, but all this "Well have you considered the cost?" handwringing people do when UBI comes up just drastically misunderstands how governments use money, while claiming to be "responsible" and "realistic"
The US government expenditure as percentage of GDP is now over one-third, as opposed to the pre-WW1 long-term average in the single digits. Keep in mind that massive infrastructure projects like the Transcontinental Railroad were able to be built in those single-digit percent times, or that US educational spending per pupil has been going up year after year for decades yet student achievement flatlined, and of recent years been trending down. Clearly, more tax revenue is neither necessary nor sufficient for the public good.
No arguments from me there.
Fundamental research and bringing a drug to market are markedly different areas that require very different skills and incentives. An organization that is good at one is not necessarily good at the other. And this isn't confined to drug research; an architect can draw up plans for a house, but a family cannot live in a plan. Foundations need to be poured, chalk lines snapped, lumber nailed together, and plumbing and wires laid, all in the context of a competitive marketplace.
I attribute a lot of the higher expenditure and lower efficiency to the continued insistence that outsourcing to contractors, effectively picking winners in a "market" to give monopoly status, is a better way to provide government services. These firms have little if any accountability to the electorate, no incentive to set reasonable prices, get anything done efficiently, and in some cases don't even produce working services
Similarly, bringing a drug to market with a patent is not a competitive marketplace, by design, and it consistently creates an outcome wherein people are charged exorbitant sums of money because of this non-competitive market. Doing a bunch of government-backed R&D and then getting a patent for it is the government picking a winner, not creating a market
Basically, it seems like the government was and remains a lot more efficient when it directly builds the capacity to provide goods and services it determines to have an interest in providing, rather than try to do this through "the market" (again, this is almost never an actual market)
In principle this is supposed to be a competitive bidding process, and then the winner is chosen by the most competitive bid rather than the government. In practice the process is corrupt and regulatory barriers are created to prevent smaller companies from submitting bids or project requirements are set such that only one company can satisfy them.
The problem here is corruption, which has nothing to do with whether the corrupting entity is a corporation. Public sector unions lobby for the same kind of labor-inefficient practices because they know that more jobs give them more members which give them more power, even (or especially) when the jobs are unnecessary or inefficient.
The advantage that existed pre-WWII is that neither large government contractors nor large public sector unions already existed in order to lobby for corrupt practices and their continued existence, so the government could just pay someone to do work and then have them to return to the private sector when the work is done. But WWII created such a large apparatus dependent on taxpayer revenue that it had enough lobbying power to sustain its continued existence, and now it needs to be disassembled before we can have nice things again.
But probably the best way to do it is under anti-corruption. You still want roads and ships to be built, but if you could get the corruption out of the bidding process then they'd be built by smaller and less consolidated companies with less individual lobbying power, and then you could address efficiency issues without having to fight a multi-billion dollar corporation or huge public sector union because that inefficiency is their profit margin/job.
Your point (1) sounds like the same old 'modern monetary theory' that never amounted to anything. To quip, MMT is both novel and correct. It has both novel and correct parts (but no parts that are both).
See eg https://www.econlib.org/library/Columns/y2021/Sumnermodernmo...
Actually most of the money is created as debt. Lincoln and JFK both issued 'Green backs', money not created via debt issues. But neither lived too long
The cost is fiction because it's a tax credit. The money is on both sides of the ledger. If you're making $60,000/year and your pre-credit taxes go up by $12,000 and then you get a $12,000 tax credit, you have paid an additional zero dollars in taxes. If you don't make much money and the government used to pay you a net $10,000 in benefits and now you get a $12,000 UBI and pay $2000 in taxes, that hasn't actually cost any additional money, all it does is convert the needlessly inefficient constellation of benefits into cash.
The "universal" part of a UBI is serving the same purpose as the progressive rate structure in the income tax, i.e. you want an effective rate curve which is higher for the rich than the poor. Which means that you don't need both. What you use instead is a flat tax rate which serves as the de facto "phase out" for the UBI. Except that because it's all in one place, there are no cliffs, and there are no poor people paying higher de facto marginal rates than rich people, and there are no mountains of paperwork to apply for benefits.
Yes, but marginal rates are important, too.
Most people miss that the 'money' will get spent. This should lead to an income multiplier. Then hopefully to a reallocation of resources moving bureaucrats from administrative work to something else.
Which is exactly the point. What's the "marginal tax rate" on low and middle income people of the existing benefits phase outs?
16k wouldn't cover daycare in much of the US let alone food, clothes, etc.
What are you imagining the typical rate is in much of America. When we lived in the city we had a range of about 225 to 300 per week as of last year. Outside of the city we pay 160 per week.
The real issue was the waiting list…
If you have a wait list, the price isn't high enough
A good example of where free market ideology falls flat
Or maybe you value the consistency of full enrollment that comes with a waitlist over the additional revenue you could earn with higher prices. Could be the case if there are high costs to changing the size of the business.
Imagine there’s a law that you can only have 4 children per caregiver. Your capacity is 8. Lose one and your revenue is down 12.5%
Lol, over 400/week is standard in eastern PA, US. Many daycares sampled in our search. Medium cost of living suburban area.
Also over 1 year wait list.
You are a lucky person. I just looked up my tax statements for 2022 and I paid $1341.67/month for an older kid (not infant). Waiting lists are atrocious and everywhere (and many places charge a $75-150 deposit for the waiting list alone); we got in fast because it was a new location. I am in the Midwest, not a coast.
That graph is also showing an ideal situation—that is, you fully qualify for and fully receive all of the benefits listed.
That means you have to also know that you qualify for them, apply for them, prove that you qualify, oh, nope, whoops, you missed one piece of proof there—that means you have to start all over.
You have to apply for each one, prove that you qualify, jump through all the hoops, you start receiving benefits! Now it's time to apply for the next one, get the slightly different proofs together, send them all in—oh, what's that? someone gave you just enough money that you went over one of the limits? you get nothing this year!
A new year, you have to apply for each one, prove that you qualify....
In my cab driving days I hauled around a bunch of people to/from medical appointments and they talk on the phone a lot...
Some people are absolute experts at navigating the bureaucracy to the point I expect they know the rules better than the people that work at the various government agencies. It was quite impressive to be honest.
One example off the top of my head; this lady was talking on the phone with a friend (or whoever) explaining how their benefits would be impacted if they declared the father of the children resided in the household and how it was much better to just lie and claim to be a single mother.
No judgement from me as it was quite the education on governmental programs.
As an added bonus I also learned a bunch of methods on how to steal groceries from walmart since people are surprisingly candid on these things when they're just having a conversation with some random cab driver they probably won't ever see again.
If you've got the mental bandwidth and dedication to learn these kinds of things, it can be very impressive. This is obviously a much less dramatic example, but when my wife worked for a costume wholesaler over a decade ago, she had to learn how customs regulations worked in order to design costumes that would be able to be imported without the higher duty associated with "wearable garments", and by the time she left that job, she knew the regulations better than at least some of the customs agents she had to interact with.
I have great respect for people who can learn to navigate government bureaucracies well enough to avoid getting caught up on all the deliberate snares and thorns—all the moreso if they can do so while also being poor, working 3 jobs, raising kids as a single parent, etc.
So, are you going to go for that 14th job interview, or are you going to go spend four hours making sure you have childcare next month? Do you finish the online test, or do you fill out the form on the benefits website for the fifth time this month?
In my Midwestern area, infant care is ~$2000/month or more at a center and you get down to ~$1200 a month if you're at the right kind of center by age 4. So there are still some thousands to contribute to childcare even with $16k "off" and then that doesn't count diapers or clothes or formula (breastfeeding is great but you can't do it forever, some can't do it at all, and it is very hard to do on a practical level if you've got an hourly/service job).
The chart (2012) is from Gary Alexander, Pennsylvania’s Secretary of Public Welfare - so take note the commenters who are trying to suggest this is libertarian propaganda.
Pennsylvania has a substantial program to pay for child care for many of its residents: https://www.dhs.pa.gov/Services/Children/Pages/Child-Care-Wo...
It is not: it's inspired by it.
If you look carefully, the numbers are different. In Gary's picture, the cliff is from $29k to $69k or so; the one above is much wider.
Also direct link:
https://web.archive.org/web/20140205020059im_/http://www.aei...
(It is funny though, the picture above seems to be very much from a serious libertarian.)
Does their political philosophy category make their argument more or less legitimate in some way?
Emotionally, yes. Rationally, no.
In fairness, the linked image is sourced to a libertarian's blog and Gary Alexander is also a conservative who was appointed to Corbett's administration and was often criticized for extensive cuts to Pennsylvania’s welfare programs which he characterized as fighting fraud and waste until he resigned after a few scandals (https://www.washingtonexaminer.com/politics/2380594/ex-penns...) including the fact that he was still living in Rhode Island and was charging tax payers for his travel/commute expenses.
CHIP -> Child Health Insurance Program.
Well, this is well outside of my area of expertise, but the only factual dispute attached to the image in wikipedia is that SSI is only available to people essentially assumed to be out of the work pool. From the SSI site: "Little or no income, and Little or no resources, and A disability, blindness, or are age 65 or older." That's a pretty tiny slice of that graph. Maybe it just hasn't been thoroughly interrogated but my gut says that whoever attached that SSI criticism would have probably addressed more severe discrepancies first.
The source-- a libertarian blog-- implies that the problem is welfare itself, but I think the bigger problem is a naive approach to means testing that is entirely divorced from economic reality.
The primary source is a welfare bureaucrat, Gary Alexander, Pennsylvania’s Secretary of Public Welfare, not a libertarian blog: https://youtu.be/Ruzo8bm96Io?t=2191
This fact alone doesn't mean much. He was appointed by a Republican governor and could very easily be a liberterian ideologue to the same degree of said blog.
So you actual critique over the chart provided and the claims made therein, rather than your ad hominem?
I don't care who it was. Are the claims verifiable, and are the derived claims defensible?
You mean former Secretary of Public Welfare, who resigned after two years on the job in 2013. He now runs an anti-welfare consulting business. He was highly controversial during the two years he was in the job, and the Obama administration had to step in. He also claimed he was moving to Pennsylvania, and then used public funds to commute to his Rhode Island home instead.
Thanks for the correction. I know nothing of that person.
A conservative "welfare bureaucrat" who was brought in to gut the welfare system
How much of that standard of living is based on credit, though? Credit is largely based on income. Housing, payment flexibility for amenities and vacations, big ticket purchases that reduce long-term costs, etc.
When 3/4 of those making less than 50k and 2/3 of those making less than 100k are living paycheck to paycheck, that extra flexibility influences quality of life quite a bit.
Quote (https://www.bankrate.com/finance/credit-cards/living-paychec...):
I'm sure that's part of it. It could help explain how one person has to live in a roach infested apartment while another can get a nice house in the suburbs. Same with having no car or only being able to afford a used one in poor condition vs having nice new cars with very low monthly payments. Those two things alone can mean a lot in terms of standard of living.
I know that they say it's expensive to be poor but it'd be a very broken system if we had a $60k a year social safety net for everyone, but poor people still couldn't afford fresh healthy food, reliable transportation, or adequate housing and were still fighting to keep their heads just above water.
That graph needs [citation]s. The source it cites does not mention how they obtained the figures for childcare, and a questioner in the comments asks for, and does not receive, a source for that information. The source article itself doesn't even seem to be the source, it links to yet another article. That article also doesn't seem to be the source, the source appears to be … a politician.
The childcare part — the largest and most problematic benefits cliff in the graph — appears to be specific to PA. But PA doesn't offer a monetary childcare benefit: one would have to be arguing that this is the specific dollar amount that the care is worth … which … IDK. I'd like to at least see that argument. But the vesting cliff, as depicted, doesn't line up with any of PA's cutoffs, either.
So, this graph smells of statistical lies.
The original chart (2012) is from Gary Alexander, Pennsylvania’s Secretary of Public Welfare.[1] Pennsylvania has a substantial program to pay for child care for many of its residents: https://www.dhs.pa.gov/Services/Children/Pages/Child-Care-Wo...
[1]https://youtu.be/Ruzo8bm96Io?t=2191
Here's an older CBO report making the same point (p.15): https://www.cbo.gov/sites/default/files/cbofiles/attachments...
I… can’t figure out what you’re saying.
1) “making $30k on welfare”. What is the dollar amount here? Literal checks? All support including food stamps?
2) someone making $81k will take home something like $50k of their income. That’s _way_ more than $30k
That's an incredibly concise description of it, thank you.
I changed career paths post age 40 via a coding bootcamp.
Despite being a terrible student when I was younger, I found had a great time learning, and I've really enjoyed my job ever since.
I found myself in a strange position though, lots of services offered benefits to students, discounts, internships, storage / compute time etc. I was not enrolled in a traditional university (although they were administering it), and so I didn't qualify, for much of any of those kinds of offers. Most of the systems in place thought of students as a typical 4 year university student and frankly ... younger. One internship I applied to did not seem to clearly indicate they were only really interested in younger, and more traditional students until the second interview.
Some of these rules I get, they don't want someone abusing their free / discounts for other reasons and they have systems in place for dealing with traditional students.
With people changing jobs and seemingly continued potential for the need for job market retraining and related disruption and etc ... it feels like it's time to make some adjustments as far as what a "student" is and so on.
Well, you missed out on a lucrative lawsuit there if you're in the US. An interviewer telling someone they're not going to be hired because they're over 40 (or even just because they're not young enough, when they are over 40) is legally equivalent to telling them they're not going to be hired because they're black or Jewish.
When you're changing your career and trying to get into an industry ... it's hard to know how that plays out. More directly a buddy of mine, also my age, and in the same camp was straight up told by a recruiter they were looking for someone younger. He had her on speakerphone and asked her to repeat it and she did.
Then the question was, do you want to be the guy who calls that out? Trying to get a job...
I don't think the outcome is a sure thing, in that case I wanted to do / say something but I felt like it was the applicant's call. Not an easy decision.
I respected his choice to just move on, still burns me up a little, but his call IMO.
I finished my bachelors degree after I turned 40. I was a much better student than I’d been in my 20s or teens.
My wife is friendly pursuing her bachelor’s and it is clear to both of us that universities are really just tolerant of non-traditional students. You won’t be treated poorly, but all of the infrastructure, tools, class progression, etc, is constructed around post-Highschool young adults.
It’s been a while since I’ve been to a community college, but I suspect they’re slightly better.
I agree, there's a weird culture barrier almost at times.
My wife was in grad school and pregnant. Some of the instructors seemed completely confused on how to handle things. Others seemed to handle it in stride.
It's like there's an expectation that "you're relatively poor, young" and some other expectations that when that's not the case the system starts to fall apart.
Frankly, because many people think that any kind of welfare or assistance is, at best, a necessary evil—and more often just evil—and they want to make it painful, complicated, and hard to access.
And given how much (light) abuse I know about in personal circles, and how some people think they deserve everything they can claim, strict rules are likely a rather good idea.
If they are able to claim something doesn't it stand to reason that we think they deserve it? I am confused how you'd measure your qualification for welfare without using the qualification metrics.
At the end of the day welfare in the US extremely stingy even if you manage to max it out - it can be a struggle to survive in a lot of areas due to a lack of CoL adjustments.
A program strict enough to ensure that absolutely zero people get it who "shouldn't" is also a program strict enough that many of the people who should get it don't. Not because they don't meet the criteria, but because the bureaucracy around vetting people is sufficiently hard to navigate.
There were parts of what I described that were brutally difficult. Particularly, we would receive a certain $ amount to purchase books (that were frequently $500+ dollars per semester). However, the office that doled this fund out would frequently be weeks behind, or your scheduled disbursement just wouldn’t show up. Then you’d have to find multiple hours out of your work week to go down to the financial aid office to wait in line for hours in an office that was only open 10am-2pm. Or sometimes the complete scam of a bank/card they forced you to use had some issue.
So, frequently, you wouldnt even be able to purchase books without a loan or extending credit til 1-2 months into the semester. by that time you could be having midterms and tons of assignment with no textbooks. I would frequently have to beg other students to let me photocopy sections of their books so I could do the assignments. Or resort to pirating.
To them that’s “working as intended” I guess. no amount of complaining ever got anywhere.
Because it's easier to pass a law that sets up such welfare when it has a simple threshold, or at least it was.
Last time this article came up, someone referenced a group of lawmakers in the US who were working at smoothing out these awful discontinuities, but I can't quickly rustle up the link.
The cliff might be a political feature: you save paying out the benefit (that you took credit for funding) since people who blow the cliff lose the money, but if they complain can be characterized as (some variation of) "welfare cheats".
And there are tons of these various programs, all with differing requirements, and some take into account others and some don't.
Some trigger "automatically" (if you apply for X and receive it, you qualify for Y, Z) and that can have weird side effects, too.
Not to condone the school's policy, but could you have donated the excess income to charity to get your taxable income back under the limit?
Probably not relevant unless you have itemized deductions/donations above the value of the standard deduction.
Try translating your idea of a sliding scale into a piece of legislation which matches your intention.
Here’s my shot: Anyone may at any time declare a portion of their income to be “cliff income,” pay 40% percent tax on it to the feds and 20% to the state, and then keep the last 40% to do with as you please. All govt and private programs that measure income are required to disregard cliff income.
It's because the people who make such rules are both innumerate and if not lazy then uncaring.
They often do use sliding scales, but that’s more complex (and expensive) to administer, and (because of multiple interacting programs) ends up not actually solving much of anything. Also, because of the way things (including available funds) work, but even ignoring budgeting for the increased admin cost, a sliding scale probably would start stepping down from full benefit where a sharp cutoff is, that would probably be more like the middle of the sliding scale, so if you “barely squeaked in under the limit” on the sharp cutoff version, you’d probably get far less benefit under a sliding scale system.