If you really want a social safety net, how should it be funded?

Question

Can we see that a graduated income tax with high marginal rates enlarges the client base and reduces the funding base for a welfare state? Can we see that for a welfare state to work, you have to have a small minority client base and a large class of people who are financially well off enough to be able to fund it?

Politically many of the payors might resent it, and if there aren't enough people dependent on the system to form a majority, you aren't guaranteed that the system will continue to be voted into place - - - but have we forgotten the lessons of the 1970s, when the system worked politically but not financially and it all came crumbling down?

High marginal rates were the govt kicking you 7 steps back for every 10 steps you could - you couldn't get ahead. Do we deny that the increase in the proportion of our population that is affluent is due to lowering the marginal tax rates, enabling more people to get ahead?

Can we see that if you do want a safety net for those who fall through the cracks, it has to be a small minority falling through the cracks, and that we can't tax people off the economic ladder and into the cracks, like we did before '81?

bgee, for starters, with low tax rates all of us have benefited - unemployment is 4.6% chief. And as for the WOT it's hard to be working anything if you're dead. I'm not saying it's being run the way I'd run it but you're suggesting we shouldn't be running it. You're putting Afghanistan in the mix with Iraq - do you think they'd just go away?

Answer 1

I would rather see forced savings accounts than any government funded programs. That is the only safety net that should be supported.

Answer 2

less than 10 percent of Americans are on public assistance at any one time. That means 90% of Americans are funding the 'safety net'. On another tack, only about 1% of taxes goes to fund welfare, 80% of which directly benefits children.

Welfare is not the cause of high taxes. For someone with a $10,000 tax bill from Uncle Sam, $100 of that is going to fund your 'safety net'. Looks like we have exactly what you say we should have. A small client base in the safety net with a large population funding it and representing only 1% of the budget.

Answer 3

You can have a social safety net, without creating a welfare state
It would have to be funded through taxation, which a lot of people will oppose, However they merrily go on their way spending three Trillion dollars to fund a very unpopular war in Iraq.
Is Iraq, or Afghanistan really more important than your own working poor, and those who are marginalized?

Answer 4

If the litany of loopholes that the higher marginal rate tier did not exist, I might agree with this statement.

The affluent receive "compensation packages" which covers a large share of their taxable burden.

Answer 5

Why not the same way they did it before FDR?
How much is someone on welfare collecting in benefits?
By the way public assistance is the biggest budget item.

Answer 6

a fine rhetorical question

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the point of a social safety net is to allow some people to consume more than they've earned. It would then seem logical to tax consumption [VAT] to do this.

:-)