The thing is, means-testing affects the people with the lowest incomes who don't qualify the most. It's like an extra tax on the lowest earners (of the class of people who don't qualify fully).
If you just passed the poverty threshold and get a 2k raise, that 2k is going to be "taxed" twice - once with regular taxes and once with losing out on your benefits. That's just not fair.
Whereas if I make 150k/year or 180k, depending which bracket you want to put it at (also idr where the brackets are exactly), as a single person, I can afford to have my taxes on everything over 120k/180k/whatever go up by a bit to make sure I'm reimbursing that 3k that I got from the government in various grants just to make sure I was doing ok.
And if you look at it real close, tax brackets are indeed a sort of means testing, so in the end it all works out.
I agree with you, but I think you're talking about welfare cliffs, not means testing.
Well designed subsidies for the poor don't have sharp monetary drop offs like these [1].
Ideally it would be something like for every extra dollar you earn, you get 10 cents less benefit. That way if you get up $1,000 raise, your subsidies go down by a hundred bucks, but you're still up $900 total. There should be no magic number where if you make $1 more you lose a huge benefit.
nobody should lose $500 of food stamps because they picked up a shift and earned and extra $100. that doesn't mean every single American needs food stamps. If you make $150k, you dont need food stamps, and the government shouldnt be giving them to you.
No, what I'm saying is, if you make a 1000 raise, your subsidies should go down by 0. Otherwise you're effectively being taxed by losing the subsidies (even if gradually).
Make the subsidies universal. You make 500k a year and want food stamps? Sure thing. You're being taxed so much on every dollar above 180k that it hardly makes a difference.
That seems completely backwards to me. If you make more you should have be effectively taxed more, just gradually. Why would we ever want to have higher taxes just so someone who makes a hundred or 500K gets food stamps they don't need. You just get a bunch of people that don't need food stamps using food stamps as a tragedy of the commons. If you make 100k you still have to pay for everyone else's food stamps, so you want to use them too.
How is it a tragedy if everyone is using the food stamps? That means they find value in them. So they're paying for them in taxes, then spending them. Where I come from that's called getting what you pay for.
That's no more a tragedy than everyone paying for then using the highway. We don't really means test the highway right? Why shouldn't the rich have to pay for their own roads? ;)
