What Phil Mickelson has in common with low-income Americans
Professional golfer Phil Mickelson has been in the news lately for complaining — and then apologizing about complaining — about the marginal tax rate he faces under new tax laws at both the federal level and in his home state of California. He claimed he now pays more than 60 percent of his income in taxes.
Presumably, he apologized because now is not the most popular point in U.S. history for questioning the wisdom of the government for taxing sharply the income of Americans who earn tens of millions of dollars a year. And as someone who earns a goodly chunk of his millions precisely because of his popularity (think endorsements), Mickelson has to consider such things.
So perhaps readers will be more interested to know that Mickelson has nothing on low-income Americans when it comes to watching his take-home earnings dissipate with each additional dollar. But not only because of tax rates.
Based on data released earlier last fall by the Congressional Budget Office, the Heritage Foundation produced two charts that depict the way federal benefits help to discourage low-income workers from trying to earn more money.
That one’s pretty self-explanatory. If you are a single parent with one child, our social-welfare system practically begs you not to try to increase your earnings between the $5,000 and $20,000 levels — because, if you do, you stand to lose benefits at a rate nearly equal to the additional income. So, while our system does a decent job of keeping people from being abjectly penniless, the price it imposes on them is a daunting climb to improve their position.
Here’s the second chart:
This is truly breathtaking. If you earn between $10,000 and $23,000 a year in this country, the government takes more of each additional dollar you earn than it does from Phil Mickelson.
Here’s what that looks like in practical terms. At the federal minimum wage of $7.25 an hour, $10,000 per year comes out to 26.5 hours per week. To reach $23,000 per year, a single parent with a minimum-wage job would have to work 61 hours per week. Who on earth would work twice as hard, knowing they’d actually be able to spend much less than half of each additional dollar they earned?
At $10 an hour, it’s the difference between working 19.2 hours per week and 44.2 hours per week. Again, it is not rational to expect anyone to make that jump. Even worse, consider a mix of the two scenarios: A single parent could get a raise of $2.75 an hour (that’s a wage increase of about 38 percent) and pick up two more eight-hour shifts per week — and be barely better off than he or she was before the raise and the extra work.
There are scenarios in which this arrangement arguably does help people improve their lives: for instance, a single mother who is able to keep herself and her child afloat long enough to finish college and take a job well above the “low-reward zone.” But there are also plenty of scenarios in which low-income Americans may just resign themselves to their current standard of living because the challenge of rising from $10,000 a year of earnings to more than $25,000 a year is so daunting.
That’s not good for them or for our nation. Our policies should encourage additional work both out of respect for individual dignity and because our fiscal condition requires that we have more people paying into the system rather than drawing money out of it.
Judging by our political debates of late, Democrats’ answer to this dilemma is to pretend the whole problem would be solved if only people like Mickelson paid even more in taxes. As Mickelson’s initial comment about his taxes made clear, not all of these high earners are willing to do that. And in any case, the math doesn’t add up.
Mitt Romney did his presidential campaign, and the GOP more broadly, an enormous disservice by suggesting, in that infamous speech to campaign donors, they simply write off these Americans, at least from a political perspective. Instead, the proper approach is to reform the safety net and the tax code so that they help people when they need it most but do not effectively trap them in their present condition. That, and to encourage other related behaviors — such as waiting until marriage to have children in the first place — that keep people from arriving at such a desperate position in the first place.
It is bad policy to punish people for working harder, no matter how much they earn. Republicans have done a good job of convincing the public that they believe this is true for high earners. Their challenge is to make clear that this very sound principle applies to people at the lower end of the income spectrum, too.
– By Kyle Wingfield
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168 comments Add your comment
Daly
January 23rd, 2013
1:58 pm
Quit worrying about what Phil makes. If anyone wants to make what Phil makes, then a good start would be to head to the golfing range and hit balls 8 hrs a day everyday. Go ahead! What are you waiting for?
guest
January 23rd, 2013
2:02 pm
Good grief Mike, way to miss the entire point.
Mark
January 23rd, 2013
2:03 pm
First off you can’t really live on 10K/yr as a single parent. You are better off on welfare than flipping burgers at McD’s or stocking shelves at Wal-Mart. This data makes sense because the spot between 10 to 20K is about the spot that you lose all your welfare/gov’t benefits. Now what would make sense is that people on welfare would have go to an 2 year associate program so that they can earn 30K a year. If I had a choice between welfare or McD’s (not corporate in Oakbrook, they’ve been a client so that’s different) I would pick welfare and have the time to improve myself to earn a living wage not a completely hand to mouth wage. It’s disgusting that you’re comparing Lefty to people who make 5k a year. There is not much dignity being 40 and flipping burgers in a rural McD’s. Not much dignity at all
Aesop's Fables and other Lib Economic Theories
January 23rd, 2013
2:13 pm
I give up, what is a “Sith Lord?”
JF McNamara
January 23rd, 2013
2:16 pm
I don’t think this is a shocker. The problem has existed for years. What’s the solution?
Dusty
January 23rd, 2013
2:26 pm
Well, KYLE, You could have posted your last paragragh alone and I would have gotten the message. Honesty and hardwork can overcome many things. I wish we could post that about every day of the week.with the additional “So try it!”..
It is the message of the GOP from every conservative no matter how;liberals try to change it. Has nothing to do with radio personalities, whether you own a gun or not, or even actual political participation. It is merely a standard that has been proven “good” for centuries.
And…
Thank you, BRUNO, for your honesty and self reliance when so much worked against you. I believe we could use you as the “poster boy ” of conservative principles. You have lived it, risen with it, and excelled.
I believe that is the American way once held in high regard. .There’s still hope to retain it. But some days I worry.
Cheesy Grits is gone but not forgotten
January 23rd, 2013
2:27 pm
I can hear the Violins playing softly for Phil now.
HDB
January 23rd, 2013
2:32 pm
When people don’t have a path towards progression, they tend to stagnate. What should be looked at is creating a pathway of mobility. What should be done is the linking of welfare benefits to education and job training. Benefits shouldn’t be cut until the program is completed and the person gets a full time job…or six years, whichever comes first. Also, child care and universal health care would assist greatly in getting persons off of welfare. If that person gets an internship during that training, let that person earn that wage in addition to the benefits…that would motivate one to reach for a higher goal….and work towards self-sufficiency!!
Comparing a welfare recipient to Lefty, however, isn’t appropriate at best; Lefty has the flexibility to move to another state, place more of his income in tax-deferred/tax-free status, thereby reducing his tax burden to where he could get away without paying ANY taxes!!
Aquagirl
January 23rd, 2013
2:32 pm
I give up, what is a “Sith Lord?”
Sorry, I forget not everyone attends Dragon*Con.
http://www.youtube.com/watch?v=wgpytjlW5wU
The guy in black—the future Darth Vader—is a Sith Lord. I’m surprised you haven’t heard the term before because it’s a lib meme.
George Lucas is certainly someone you’d call a lib, a lot of people think he put that line in there deliberately as a reference to the “you’re with us, or you’re with the terrorists” line from George W. Bush in Sept. 2001.
Frankly I think Mr. Lucas was misguided, as Dick Cheney was clearly the Sith Lord in that administration.
Aesop's Fables and other Lib Economic Theories
January 23rd, 2013
2:37 pm
Damn, cheesy said something coherent. And here I thought it would never happen.
Real Athens
January 23rd, 2013
2:38 pm
“Rand Paul, left a giant, gaping hole this morning in the dummycrats presidential prospects for 2016.”
No fan of “monarchies” myself, but If you truly believe this to be true, you’re a damn fool.
md
January 23rd, 2013
2:41 pm
“Start by raising the minimum wage to $10 an hour.”
If it were that easy, why not make it $20, $30, etc…..
Going up to 10 from 7 might not be a problem for corps that are making some profit, but for those that may be in the hole or just breaking even it would most likely mean someone has to go. If a corp only has $14 to pay employees in it’s budget, instead of having 2 employees it can then only afford 1…….
So be careful what you wish for……
Aesop's Fables and other Lib Economic Theories
January 23rd, 2013
2:41 pm
Why, of course, I forgot. The libs would vote for someone who shirked their basic responsibilities and got four American heroes killed and one of our embassies burnt slam to the ground. What was I thinking?
md
January 23rd, 2013
2:44 pm
“There is not much dignity being 40 and flipping burgers in a rural McD’s.”
And why is somebody that is 40 flipping burgers in the first place?
Dusty
January 23rd, 2013
2:51 pm
MarkV
You show the weakness of America’s last decades. That is: If you can get more money from government handouts, then don’t do honest lowlevel work such as flipping hamburgers or picking fruit. That’s it! Throw away your freedom of self reliance. Live off the money of others (taxes). Be a taker and not a giver.
Their only pride left will be “I don’t work at no McDonald’s!”
JDW
January 23rd, 2013
2:58 pm
@LBB…”Wrong. At his income level, the AMT would kick in, essentially eliminating the deduction for state taxes. Been there…”
I believe that would only happen should his effective rate fall below 28% which it should not.
Real Athens
January 23rd, 2013
3:02 pm
The AMT has been “de-fanged”. It is now indexed to inflation ala the fiscal cliff negotiations.
http://business.time.com/2013/01/03/at-long-last-a-permanent-patch-for-a-dreaded-tax/
Bruno
January 23rd, 2013
3:03 pm
Thank you, BRUNO, for your honesty and self reliance when so much worked against you. I believe we could use you as the “poster boy ” of conservative principles. You have lived it, risen with it, and excelled.
Dusty–Thanks for the compliment, but none is needed. I came from a time and place where you were expected to work and provide for yourself, it was the norm. I’m not sure what happened along the way to lead us to the current Entitlement Mentality.
getalife
January 23rd, 2013
3:06 pm
Keep slobbering on the wealth cons.
Stay the course.
Our President need the house.
Thank you.
JamVet
January 23rd, 2013
3:08 pm
What was I thinking?
Probably the same thing as that loser and coward Mitt Romney – blame our public servants/employees of Uncle Sam for sympathizing with their murderers.
Michelson could always move to Singapore…
Dusty
January 23rd, 2013
3:13 pm
JFMcNamara asked: what is the solution to our problem of non working , dependent on government Americans?
New immigrants (sometimes illegal) have shown us how to solve one problem. They come and work for basic wages and filll the needs for the foundation of economic survival. They survive happily with families, send money “home” to support others and usually possess a strong faith.. They work hard, support each other, practice thrift, and appreciate employment.
They show us repeatedly how it can be done with self reliance. and determination, something so many others have forgotten.
Lil' Barry Bailout - OBAMAPHONE!!!
January 23rd, 2013
3:20 pm
Rather than the successful understanding the poor, we should insist that the poor understand the successful. Maybe they would learn to do the things that lead to success.
Dusty
January 23rd, 2013
3:25 pm
Here comes GETALIFE with “slobbering” and JAMVET with his disgust of anyone rich, ’specially Romney, a man in the political world who would dare run for the presidency
Wealth envy is an ugly thing but some people can’t hide it.
I ‘m leaving for some fresh air. .
Bruno
January 23rd, 2013
3:29 pm
Rather than the successful understanding the poor, we should insist that the poor understand the successful. Maybe they would learn to do the things that lead to success.
LBB–A suggestion I’ve made for years. IMO, it’s a waste of time to study failure.
It seems that some school programs are making a swipe at “success training” by putting buzzwords on their signs. Personally, I think Newt’s idea about allowing kids to work as school janitors was right on the mark. Nothing prepares you for work better than work.
Donald Norman, Marietta GA
January 23rd, 2013
3:41 pm
I read quite a bit of this article, but could not hold my breath long enough to complete it. Indeed, the system is broken, at least if it intended to lift folks out of poverty. If, as I suspect, the system is designed to keep people on the public nipple then it works just fine.
Before I address the broken system, however, I’d like to clear up the intentionally muddy waters. The government does not take more and more from folks caught in it’s clutches. It gives them less because they are earning more.. There is the disincentive for work.
The fix is really very simple. Instead of lowering the entitlement by the same (or whatever the ratio is, ‘m not sure.) amount the working poor increase their income; the system should reward work by implementing a different ration of entitlement taken away for increased income. Say, for example, Sally is a single mom who works part-time, but does not make enough to make ends meet. So, public largess agrees to make up the difference so that she and her children are clothed, sheltered, and feed. In time Sally is made full-time and doubles her income. It would be stupid for her to take the full-time position if the public funds are lowered by the same amount. But, if the entitlement were lowered one dollar for every four dollars of increase it would make sense for Sally to jump at the raise.
This way if Sally began by receiving $12,000 in entitlements while she was earning $7,000 at her job, she could double her income on the job and earn $14,000 while still receiving $9,000 in support ($12,000 – ($1 of every $4 of increased pay)) for a total of $23,000. A setup like this would make since all around. It is good for Sally because she realizes that there is a way off the public dole. Her self image will be lifted along with her income. It’s good for the government in the long run because Sally and her family will, in the near future, will be completely self-supported as she continues to make herself more and more valuable as an employee.
Aquagirl
January 23rd, 2013
3:43 pm
IMO, it’s a waste of time to study failure.
Not at all. If you don’t know what’s wrong, how can you fix it? The problem is we study things but we don’t have the will to fix them. That’s too much trouble. Or sometimes the problem costs more to fix than to band-aid. We can’t fix everything.
If someone is 40 and flipping burgers they might have an IQ of 80. Maybe they were basically raised by wolves and snacked on lead paint chips as a child. Cry as you might, that person will probably never be self-supporting. Screaming at them to get off the dole and get sterilized is not realistic.
Matt321
January 23rd, 2013
3:52 pm
Strange to see you credit Heritage, when this has been a problem widely talked about among liberal think tanks for a long time. But good to see you on board reducing effective marginal rates of the poor!
For those interested in policy prescriptions, Milton Friedman proposed a negative income tax to replace all poverty programs. A variant of this would be a universal tax credit, paid out in monthly installments, to every American with an income of less than, let’s say, one million dollars (indexed for inflation). The universal tax credit could be set to the poverty line (so no one lives below the poverty line), a living wage, whatever.
Of course, paying for this could be a problem. You could, for example, eliminate every single loophole, deduction, credit, etc., and write a multi-tiered progressive marginal tax rate scheme (that treats every dollar that comes in the door as income, whether inheritance, gift, earned, or unearned) to pay for it all. This would mean every American would be guaranteed food and shelter, and the wealthier you were, the more you’d contribute to this American guarantee. Also, since you got the tax credit no matter what, there’d be no higher effective marginal rates on low income earners.
Peadawg
January 23rd, 2013
3:53 pm
Read all the way to “the Heritage Foundation” and stopped.
Michael
January 23rd, 2013
3:54 pm
Who the heck is his accountant? Might get Romney’s so he can bring it on down to 12%.
Jefferson
January 23rd, 2013
3:57 pm
A man (or woman) that takes pride in his job and does it well deserves respect no matter what his job,pay or age is. To be condiscending of pay and occupations is a childish character flaw that just shows your mommy and daddy did a poor job raising you.
Aesop's Fables and other Lib Economic Theories
January 23rd, 2013
4:06 pm
So, here we are. Bush gets a memo saying that al qaeda is threatening to attack the US. Now, as most of you already know, the US is a rather large place. What should Bushie have done? Put some cannons at the Jefferson Memorial? Mount some AA on the Golden Gate Bridge? M1 Abrams patrolling the Superdome? 50 Cal machine guns bristling from the windows of your neighborhood A&P?
So how did the libs react to this memo after 9/11?
Now, fast forward, bruno’s office gets a memo from one of her own employees detailing threats against a specific place that even had an address, so the libs could find it. Turns out, bruno doesn’t read her mail at work. She doesn’t even have any procedures in place, you know, like daily situational briefings about the different areas of the world, presented to her by people she employs. Nope, it seems as though memos and cables are scratch paper or go straight in the trash can under bruno’s watch. Apparently, no one has been instructed to read such material and share the information with the person in charge of making the decisions.
And how do the libs react to this?
Attack Rand Paul.
Bruno
January 23rd, 2013
4:06 pm
Not at all. If you don’t know what’s wrong, how can you fix it? The problem is we study things but we don’t have the will to fix them.
It’s kind of a subtle point, Aquagirl, but the only way to know what’s “wrong” is to fully understand what makes things “right”. Then, from a practical standpoint, it’s a lot easier to simply do what’s “right” rather than trying to remedy 10,000,000 wrong ways.
A very close analogy exists in health care. It’s a lot easier and more effective to practice good health habits than to try to cure the 10,000,000 various illnesses which result when we don’t practice good health habits.
Bruno
January 23rd, 2013
4:14 pm
If someone is 40 and flipping burgers they might have an IQ of 80. Maybe they were basically raised by wolves and snacked on lead paint chips as a child. Cry as you might, that person will probably never be self-supporting. Screaming at them to get off the dole and get sterilized is not realistic.
And in case you’re misinformed, Aquagirl, I’m fully in favor of helping those who CAN’T help themselves, as is every conservative I’ve ever met. I draw the line at those who WON’T help themselves.
A man (or woman) that takes pride in his job and does it well deserves respect no matter what his job,pay or age is. To be condiscending of pay and occupations is a childish character flaw that just shows your mommy and daddy did a poor job raising you.
I couldn’t agree more, Jefferson. The condescension you speak of exists on both sides of the political aisle, however. On the Con side, it’s usually expressed directly. On the Lib side, it’s typically disguised as some kind of benevolent paternalism.
wallbanger
January 23rd, 2013
4:19 pm
This makes too much sense for most liberals to even understand it.
tireofit
January 23rd, 2013
4:20 pm
A point could be made that no one needs more than 100,000,000 dollars. If that’s not enough for someone then you know where you can go. I certainly live on that.
JamVet
January 23rd, 2013
4:25 pm
Brilliant analysis, wallbanger! Absolutely brilliant!
MarkV
January 23rd, 2013
4:30 pm
td @ 1:16 pm
“Please enlighten us to what the 47% that pay no dues provide to the “civilized society”? What contributions do they make?”
They make things and provide services for others, such as for you, td, at incomes that even the Republicans themselves have considered too low and have made laws to provide those people with assistance and not require them to pay taxes.
MarkV
January 23rd, 2013
4:33 pm
Dusty @ 2:26 pm
“Well, KYLE, You could have posted your last paragragh alone and I would have gotten the message. “
The last paragraph? The one about taxes being punishment? Is that how you understand what taxes are?
Aquagirl
January 23rd, 2013
4:38 pm
I’m fully in favor of helping those who CAN’T help themselves, as is every conservative I’ve ever met. I draw the line at those who WON’T help themselves.
Who are you to decide who can’t and who won’t? I’ve worked with functionally illiterate adults who are quite intelligent, but they will never read or write very well. I was raised in a house with two parents who read constantly. I don’t remember a time I couldn’t read. If I had been raised by a crack addict who wh@red me out at 14, I doubt I would have those skills.
The idea of working hard and pulling yourself up by your bootstraps doesn’t extend as far as many conservative/Republicans think. Some people overcome great adversity, we should encourage that, but I’m not gonna slam anyone who doesn’t climb every freakin’ mountain. I don’t sit around and decide if they’re lazy or not based on 5 seconds of observation in the grocery store line where its OMG lookit that welfare mamma and her food stamps! Slut!
Again, that’s why I no longer vote Republican, the party shows a complete lack of empathy. That’s why they fought gay marriage to the last gasp, yanking out all sorts of nonsense and babble.
Most people want to work, raise a family, and go about their business as long as you extend them the same courtesy. A few don’t. The Republican non-intelligentsia inflates the latter group to a Mongol horde who will pick ‘Merican clean like locusts and take yer guuuuuunnnnssss!
That’s simply not true, unless you live in talk radio land.
MarkV
January 23rd, 2013
4:40 pm
Dusty @ 2:51 pm
“If you can get more money from government handouts, then don’t do honest lowlevel work such as flipping hamburgers or picking fruit.
Dusty,
Those people who flip burgers or are picking fruit, those are the moochers you Republican heroes are so disdainful about, when they talk about the 47% who do not pay federal taxes.
Rafe Hollister preparing for an Obamanist America
January 23rd, 2013
4:51 pm
I think you explain how this entitlement scheme works, and that is what it is, a scheme, is that it is based on good intentions. We have been so long without any improvement or success in reducing poverty, that instead of admitting we were wrong and changing our policies, we have settled for just doing things we hope might help.
The Democrats are happy to settle for trying to do something beneficial, even if it doesn’t work, because they are rewarded with a ever growing voter base, that cheers their misguided attempts to help. They are deemed the good folks because they care; and the folks, who say it is not working and we need to quit pretending it is and try other things, are branded the bad people.
Rafe Hollister preparing for an Obamanist America
January 23rd, 2013
5:04 pm
Who are you to decide who can’t and who won’t?
Who are you to decide who can pay more in taxes. You may know the gross income, but you don’t know the liabilities, maybe a kid with cancer, maybe a brother in law with a mental condition, but we are never asked, can you pay more? The government makes this big pronouncement, we need to do more and we don’t have the money, so we are raising your taxes. We do not get to respond, we just have to pony up.
What if we said, hey Mr. President, I really had a hard year and although I made all this money, my outgo was tremendous, and I was wondering could I get a break for just one year, and use that money to help my mother pay off all her medical bills. I don’t think you would get any sympathy.
Buzzy
January 23rd, 2013
5:21 pm
I have to investigate any statistics or charts or opinions from the Heritage Foundation very carefully before I took them to be true.
td
January 23rd, 2013
5:24 pm
MarkV
January 23rd, 2013
4:33 pm
Dusty @ 2:26 pm
“Well, KYLE, You could have posted your last paragragh alone and I would have gotten the message. “
The last paragraph? The one about taxes being punishment? Is that how you understand what taxes are?
Absolutely taxes are punishment when they are progressive in nature. If all taxes were the same rate then the harder you work, the more education you get and the more marketable your skill set then the more money you get to keep. That is called incentive for making the right choices in life and working hard. We current reward laziness.
JamVet
January 23rd, 2013
5:28 pm
We currently reward laziness and sheltered wealth and punish human labor and necessities.
Long live the plutocracy!
md
January 23rd, 2013
5:31 pm
A can’t is one that would gladly trade places with a won’t but is unable to………….I have a family full of wont’s, and believe me they could if they wanted to.
And the law of averages says my family isn’t much different than all the others…….
Hillbilly D
January 23rd, 2013
5:45 pm
A man (or woman) that takes pride in his job and does it well deserves respect no matter what his job,pay or age is.
Amen to that. I ain’t near being perfect but I’ve always figured I was no better than anybody else and nobody else is any better than me. We’re all the same in God’s eyes. Like all humans, I fall short but I do my damndest to look down at no man and to look up to no man, especially not for their occupation or how much money they have or don’t have. Do unto others really does work if more folks would try it.
MarkV
January 23rd, 2013
5:48 pm
td @ 5:24 pm
“Absolutely taxes are punishment when they are progressive in nature. If all taxes were the same rate then the harder you work, the more education you get and the more marketable your skill set then the more money you get to keep. That is called incentive for making the right choices in life and working hard. We current reward laziness.”
This is a typical condescending, ignorant view of people who make less than you do; many of who work harder than you do, and which you could not live without. The view that progressive taxes are a punishment is again ignorant, and rejected in most developed countries, where people recognize that people who earn more money generally also benefit more from the services that the government provides using the tax revenues.
Lil' Barry Bailout - OBAMAPHONE!!!
January 23rd, 2013
5:52 pm
Aquagirl: If you don’t know what’s wrong, how can you fix it?
————————-
We know what the biggest cause of poverty is–single parent families. How do we fix it? Remove the incentives to young women to have a baby, get free housing and food and spending money. We didn’t have a whole bunch of single moms living in government housing before we had government housing. We didn’t have them on food stamps before we had food stamps. They weren’t on the government teat until the government started letting it hang out where all could access it.
Want less failure? Stop paying people to fail.
Matt321
January 23rd, 2013
5:56 pm
td, 5:24 pm
“Absolutely taxes are punishment when they are progressive in nature. If all taxes were the same rate then the harder you work, the more education you get and the more marketable your skill set then the more money you get to keep. That is called incentive for making the right choices in life and working hard. We current reward laziness.”
Taxes are all the same rate, within the same bracket. Wage earners all generally pay the same amount of taxes on the first $100,000 of income, for example. Do you understand we have a marginal tax rate system? The more money you make, the more money you get to keep. This is always true. Even at the highest bracket, the marginal rate is only 39% – which means for every dollar you make, you still keep over 60 cents. That’s for the wealthiest Americans. Compare that to the example Kyle gave, though, for extremely poor Americans – for every dollar they make, they only keep in some cases 5 cents.
As Warren Buffet said, there is a class war in this country, and his class is winning.