[lbo-talk] Sawicky's Math (was Re: Obama on poverty:straightDLC=

Jordan Hayes jmhayes at j-o-r-d-a-n.com
Thu Apr 3 08:59:19 PDT 2008



>> If Social Security isn't "targeted" (last I checked, your benefits
>> were tied to how much you paid into the system over the years)
>
> With a higher replacement rate for low-wage workers than high-wage
> ones.

So you concede the point?


>> EITC is "targeted" like a shotgun in an outhouse with the door
>> closed.
>
> Targeted = only for those below a certain income. Universal =
> available to all workers.

The cutoff this year for EITC is something like $38k with more than one kid ($33k for one kid, $16k for single with no kids), and it's there specifically to right the wrong of FICA/Medicare, which for low-wage earners is often the single largest deduction from their check (and is awfully regressive).

As an example, if you make $25k (nominal $12.50/hr, full-time, no deductions) your FICA is $1550 and Medicare is $362.50, but your income tax is only $698: payroll taxes are 2.5x income taxes. If you have two kids, you can reduce that income tax to $0 and get a $1302 refund from the child credit -- almost, but not quite wiping out your 'payroll taxes' ... however, EITC would give you another $2687 bringing your total refund to $3989 or nearly $29,000 of gross wages; the single/no-kids filer would wind up with $22,390 net of taxes. That's like a 30% boost!

How can you not be for a program like that?

/jordan



More information about the lbo-talk mailing list