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Last Visit 2013-12-21 10:16:06 |Start Date 2006-10-04 18:08:27 |Comments 59 |Entries 79 |Images 19 |

Category:

08/17/13 01:25 - ID#58003

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.)
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