[ternus]

I can't find the original tweet, but someone (half?) jokingly proposed a law that all benefits must be defined as continuously differentiable functions (thus making cliffs impossible).

"Yeah, I made $1M last year. Here's my SNAP check for six cents."

[conception]

They should be. And for the great majority of citizens, they should be calculated automatically along with taxes without the need for filing/paperwork. But we must think of the Intuit shareholders and the harm that that would cause them.

[truelson]

If someone in the coming years ran on taking down regulatory capture and returning that as social safety net funding, public goods, and lower taxes, and had the chops to actually deliver, they'd do well.

Though best to start local government first, obviously.

We're reaching breaking points in so many places...

[almosthere]

They definitely should be. Some people might be in situations where asking your boss for a 10k pay cut gives them an extra $1k per year. Just dumb.

[NoMoreNicksLeft]

I like my cliff. I earn enough that I and my family are ineligible for most welfare schemes. I do not want even 6 cents worth of SNAP. I spent my entire childhood on that, and it disgusts me. Thus, were this policy ever seriously proposed, I would do what I can to dissuade my legislators from voting it into law.

There are others like me, too, I am not unique.

[INGELRII]

There is idea behind that, but continuous is not enough.

The variable is all transfers, taxes and benefits T = [all taxes - all benefits] as function of income per person (including children). T starts negative (benefits are negative taxes).

Goal: monotonously increasing effective marginal T rate.

[dgoldstein0]

This. No need for continuity in the derivative - the marginal tax rate should be fine to jump around - but should start low (I'm fine with negative) and increase as you earn more. Like US federal tax brackets, but with benefits also considered.

[terminalshort]

To calculate the amount of your childcare benefit take the negative of the your adjusted gross income (box 26a), divide it by 10,000, and add 2. Then take the arctan of that result and multiply by 5,000. Add 2500π and write the result in box 46. You may round the value of π to 2 digits. If you are filing as head of household, divide the amount in box 46 by the definite integral from 0 to your adjusted gross income (box 26a) divided by 10,000 of sin^2(x)/(x^2 + 1) dx, and write that amount in box 48. If you are unable to find the function of the anti-derivative, IRS rules allow you to approximate with a Riemann sum using the midpoint rule and a rectangle width of 0.1.

[smilekzs]

Or, as it has always been, piecewise linear approximate it.

[littlestymaar]

It's not sufficient to make cliffs impossible, you just never want the effective marginal tax rate go above a certain threshold.

It's insane that we cap marginal tax rates for the wealthy below 50% “because they need incentives to work harder” yet the working class family is facing an effective marginal rate near 100% because of reduced benefits.

The solution would simply be to stop making benefits decrease when salary goes up.

“But it's going to be insanely expensive” one may say, but it's an accounting illusion. All we need to do to break the illusion would be to stop counting gross public spendings and taxes and instead count the net public spendings/taxes for each individual (that is, over the whole population you take the difference between what they pay and what they receive and that gives you how much they contribute or how much they cost, instead of the current accounting system where we count people paying for their own benefits).

What's really expensive is the economic inefficiency of the current system.

[dgoldstein0]

> The solution would simply be to stop making benefits decrease when salary goes up.

That's an option, and I'd be interested in how the math works especially with predictions of how the economy would respond.

That said I don't think not decreasing benefits is an important requirement. But net income (benefits + earned income - taxes) should be strictly increasing with earned income, and probably at a rate of at least 50% but ideally higher than that up to some reasonable definition of middle class income. It should never be the case that if you earn more you can end up worse off.

[zozbot234]

Actually, optimal taxation models tend to show that a base transfer at zero income with an initially "high" marginal rate for clawing back the transfer at the lowest end (but still no higher than 100%, and falling very quickly as earnings increase!) works very well. (Marginal rates then rise progressively for higher incomes, and paradoxically become lower again at the very top end, trending towards zero at the extreme top-end of the scale. This is actually a consistent result in non-linear incomes taxation models; the very top earner should face zero marginal tax on the very last cent she earns!)

The intuition is that you only "feel" the high marginal rate if you earn very little, which impacts very few people; but the effect of making the break-even point more manageable with lower marginal rates for most earners is felt throughout the incomes scale. What really screws up things is higher-than-100% marginal rates, which are regrettably common in real-world systems amd completely useless.

[CalRobert]

I agree with you, but for what it’s worth I live somewhere top marginal rates are about 50% and indeed 32 hour weeks are very common. I think this is a good thing though.

[eru]

Yes, looking at the net transfers makes more sense.

However, net transfers aren't a function of income alone. They depend on lots of factors, because they are plenty of benefits that depend on more than income and plenty of taxes like that, too. Eg capital gains taxes and property taxes and sales taxes and tariffs don't depend on your income.

[falseprofit]

I would guess that was not a joke. The benefits could drop all the way to 0 at a reasonable point unless you impose the stronger condition that the function be analytic.

[Chinjut]

Why continuously differentiable and not just monotonic?

[hansvm]

Monotonic is what we have, and it allows cliffs.

Suppose, e.g., that you can get $5k/yr in benefits if you make less than $10k/yr in other revenue and $0 otherwise. Unless you have a viable strategy for pushing past $15k/yr it's a strong financial disencentive against actually working, and even then your incremental ROI isn't very good past that cliff (if it takes an extra hundred hours to push to $15.1k/yr, then compared to your $10k/yr option you're only making $1/hr for the extra work).

[estimator7292]

You jest, but as an unemployed student I was approved for $6/mo of SNAP.

Like... for what possible purpose would the calculation even go that low? Just deny the application instead of wasting everyone's time and resources. I have no idea how long they put $6 into the account. I never bothered to look.

[aidenn0]

That can still have work disincentives; anywhere the magnitude of slope of the benefits is close to (or steeper than) the slope of the income as it phases out, then working more can get you no gain (or lose you money).

[eru]

Continuously differentiable doesn't mean your SNAP check couldn't go to zero.

[paganel]

If you continue with the idea of transfers, which is, in effect, the current government buying off parts of its constituents, then "democracy", whatever has remained of it in the West, will die for good. What happens if I receive money from the Government but in the same time I'm also actively opposed to said Government's actions? Will I be allowed to speak against the Government that is, as a matter of fact, paying me? Will I have second thoughts of doing it? Will the Government cut off aid to me if I'm too vocal against said Government's actions?

All this to say that all we're doing is turning most of our countries' citizens into de facto slaves, people with no political free-will and who are well-aware that if they were to speak out against the powers that be they risk destitution.

[OkayPhysicist]

> What happens if I receive money from the Government but in the same time I'm also actively opposed to said Government's actions?

Nothing? That's how it's worked in literally all functioning democracies. The purpose of any government, democratic or not, is to benefit its constituents. If it doesn't do that, we have a moral obligation to destroy the tyrants. Those benefits range in their tangible value, from hard to quantify things, like establishing public expectations of behavior (laws), to easy to quantify (subsidies like wellfare, farming subsidies, etc).

I'm truly baffled by your take that seems to insist that helping the needy somehow makes you moreso a slave to the government than the whole monopoly on legitimate use of force thing.

[eru]

You are mixing up lots of different ideas.

You can have net transfers to the poor without turning most of your country's into net recipients.

I also don't understand why you assume that people who are net recipients would stop complaining or voicing their opinion? That's not at all what happens in practice.