Re: Tax Cuts Don't Boost Revenues

On Feb 23, 11:05=A0am, Jeffrey Turner <jtur...@[EMAIL PROTECTED]
> wrote:
> > Would you take this offer? Why or why not?
>
> It depends on what it meant to the country, the economy, my community
> and me. =A0And maybe what kind of work it was. =A0I'm not sure what an
> economy of 100% taxation would look like, so it's kind of hard to answer
> questions about it.

Actually, you can see something similar at low ends of the
income distribution.

http://economics.about.com/b/2008/02/10/marginal-tax-rates-of-over-100.htm
---
A front-page case study highlighted in the Toronto Star this week
helps illuminate the problem. That example profiled the plight of an
unemployed single mother, with two children, making roughly $14,000
from welfare. Then comes a chance for the mother to take a $14,000/
year part-time job. One of the teenage children also gets a part-time
job, as well as a bursary-subsidized spot at a local university.
Government policy should be encouraging such op****tunities: Employment
and education are both paths out of poverty and welfare-dependency.
But as the Star's numbers show, the family's net income barely rises
at all as a result of these changes -- flat-lining near the $14,000
level even though its nominal income has risen to $31,000. That's
because the government claws back so many benefits as soon as the
family starts climbing the economic ladder.

This is a problem all over the country, not just in Ontario. On Nov.
22, there appeared on this page an op-ed by Jeremy Leonard,
Christopher Ragan and France St-Hilaire, co-editors of A Canadian
Priorities Agenda: Policy Choices to Improve Economic and Social Well-
Being, published last month by the Institute for Research on Public
Policy. As the authors wrote:

"Effective marginal tax rates are remarkably high at very low levels
of income. In fact, due to the interaction of various transfer
programs, the effective tax rates are well in excess of 100% for
certain annual income levels between $10,000 and $20,000. At income
levels around $30,000, the effective marginal tax rate is about 80%.
For any low-income Canadians facing marginal tax rates like this, what
is the incentive to work harder and earn more?"
---

Welfare recipients have at least some incentive to work because of the
future prospect of rising above a welfare existence.