government benefits
[Update: I couldn't stop thinking about this, so when I got a chance I sat down with my 1040 and calculator. I think these numbers are pretty close.]
A family of three who earns $19,000 per year in self-emloyment income actually makes approximately the same amount as a family of three who earns $24,000 per year in self employment income.
Here's how I figured:
19K family gets:
$3792 in food stamps per year ($316/month)
$3169 in Earned Income Tax Credit per year
$912 in NYS Earned Income Credit
and owes:
$2685 in Self-employment tax
$0 in Federal Tax
$0 in NYS Tax
Grand Total: $24,188
24K family gets:
$0 in food stamps
$3169 in Earned Income Tax Credit
$912 in NYS EIC
and owes:
$3391 in Self-employment tax
$0 in Federal Tax
$252 in NYS Tax
Grand Total: $24,438
To make matters even worse, once that family makes $27K, they deal with:
Losing their free Health Insurance
$444 less in Earned Income Credit
$133 less in NYS EIC
$424 more in Self employment tax
$179 more in Federal tax
$111 more in NY tax
So, in effect they still don't make any more money, provided they find some kind of cheap health insurance costing only $140/month.
This is insanity. Why does $19,000=$27,000?
(I realize that my tax numbers are probably off a couple dollars, and I would love to be corrected if I am way off, but I think I'm pretty close to hitting the nail on the head.)
A family of three who earns $19,000 per year in self-emloyment income actually makes approximately the same amount as a family of three who earns $24,000 per year in self employment income.
Here's how I figured:
19K family gets:
$3792 in food stamps per year ($316/month)
$3169 in Earned Income Tax Credit per year
$912 in NYS Earned Income Credit
and owes:
$2685 in Self-employment tax
$0 in Federal Tax
$0 in NYS Tax
Grand Total: $24,188
24K family gets:
$0 in food stamps
$3169 in Earned Income Tax Credit
$912 in NYS EIC
and owes:
$3391 in Self-employment tax
$0 in Federal Tax
$252 in NYS Tax
Grand Total: $24,438
To make matters even worse, once that family makes $27K, they deal with:
Losing their free Health Insurance
$444 less in Earned Income Credit
$133 less in NYS EIC
$424 more in Self employment tax
$179 more in Federal tax
$111 more in NY tax
So, in effect they still don't make any more money, provided they find some kind of cheap health insurance costing only $140/month.
This is insanity. Why does $19,000=$27,000?
(I realize that my tax numbers are probably off a couple dollars, and I would love to be corrected if I am way off, but I think I'm pretty close to hitting the nail on the head.)