[Escapado]

I am also confused by cliffs. Maybe someone more knowledgeable than me could explain why you would ever want them for something like this instead of just having higher progressive tax rates for well off people to make up for it. Naively I would think that that’s significantly easier from and administrative point of view too.

[dragonwriter]

> I am also confused by cliffs. Maybe someone more knowledgeable than me could explain why you would ever want them for something like this instead of just having higher progressive tax rates for well off people

Because middle-income clawback with sharp cliffs rather than gradual clawback starting or reaching into upper income ranges pits the middle-income segment of the working class against the poor in funding battles, helping to avoid political pressure to further increase benefits, and it also allows what can be marketed as a support system for the poor to also serve as an anchor that creates a progress wall just above the area where it provides net benefits, while minimizing the marginal impact on high-income earners.

Is this socially good? No. But it serves the interests of the people who politicians tend to see as their most important constituents, while creating a sharp division of interests between the poor and middle-income segments of the working class, obstructing the formation of working-class solidarity.

[Escapado]

So it is just the right wing neoliberal playbook then. Protect the rich and put everyone else against each other so we don’t focus on them. I want this to stop.

[avcloudy]

It's because it's easy and administratively simple, and it's easy to figure out how much you have to earn before you can actually bear the cost. In reality, it leads to a grey area where in the short term you're better off earning less to get the benefit, but it's eminently fair and easy.

And in general, increasing taxes is not easy, and the richer people are, the more able they are to fight against it. So we often create regressive tax regimes despite knowing they aren't very good systems.

[sokoloff]

It’s easy to understand, but not easy to live under. If the worst case is I lose 25% of every “extra” dollar in some range, I have to think about it way less than if I lose the entire benefit for being 1 unit of currency over a limit.

In the former case, I can think/worry about it for 10 minutes per year; in the latter case, if I’m close I have to think/worry about it a lot more and carefully plan out and estimate things like tax-deferred savings and capital gains/dividends/capital gains distributions to make sure I don’t earn an extra dollar and pay $10-25K of marginal tax on that dollar.

[Escapado]

First off, the following is not meant to combative but I think this confuses me. If there was no cliff there was nothing to do administratively on that front, no new checking at all. We already have progressive tax systems in many countries. Adding 1% at the top end can’t be that difficult. My health insurance (in Germany) raises prices every year and most people don’t have a choice there either. Property taxes increase all the time. If we had a wealth tax and a higher (at the top) progressive capital gains tax it seems to me that the pitch would be politically even simpler: there are 5% that will pay a little more percentage wise from now on while retaining vast amounts of wealth and 95% that will pay less or much less. Genuinely I have heard that we can’t raise taxes on rich people because they will evade them but it also sounds like a lie repeated so often that we just take it as the truth. Didn’t a lot of countries or US states have higher marginal tax rates without seeing mass exodus of millionaires? Can’t lawmakers focus on plugging the loopholes rich people use? I mean our government is currently trying to go out of its way to make sure that unemployment benefits are only paid out to people who „really deserve them“ by tightening the rules around that and the political debates I see put incredible amounts of emphasis on „fairness“ and that we „have to do something about those who just profit off the system without contributing“ when it’s about that topic. The fervour is clearly not applied symmetrically.

[Gibbon1]

One thing I've become obsessed with is people trying to solve problems in the wrong domain.

I think these sorts of things are because people try to allocate resources according to the 'moral domain' instead of basic need.

Have read that in the 19th century there was constant attempts to means test welfare based on who was deserving. And it was basically full of fail and you'd spend more on enforcement than just paying out by need. You were paying able bodied people to go around and try and determine if the recipients were deserving.

It's one of the reasons everyone gets social security. You were a happy go lucky spendthrift and are now old and broke, here's your money. You were thrifty, wise and lucky enough you'll never need it, here's your money.

The issue of cliff is real and present for low income people. The loss or reduction of benefits takes a big bite out of marginal increases in income. Also the sudden loss for instance when someone goes back to work isn't great when usually they financially stressed and the new job comes with increased expenses.

On topic personally as a childless when I hear someone bitch about paying for someone else's kids I think yeah who's going to change my bedpan when I'm old, you? I doubt it.

[RugnirViking]

the media is not good at complexity. Social media even less so. "government raises taxes" or even "our tax rate number is high compared to historical" is a much worse signal for the government than "uh theres this weird condition that only applies if you have kids and also earn less than a certain amount unless blah blah blah