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.

Heritage Low Income Chart 1

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:

Heritage Low Income Chart 2

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

Aesop's Fables and other Lib Economic Theories

January 23rd, 2013
11:52 am

So we can give them more than the dummycrats do.

Finn McCool (The System isn't Broken; It's Fixed)

January 23rd, 2013
11:58 am

Start by raising the minimum wage to $10 an hour.

Hillbilly D

January 23rd, 2013
11:59 am

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

Agree on that but honestly, not exactly sure how we get there.

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.

That’s a no-brainer but I’m not sure the government can really do anything about that. Personally, I think churches, across the spectrum, should quit dabbling in politics and concentrate on things like that. That fight can only be won through persuasion, in my opinion.

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.

That’s it in a nutshell. I’ve said before that the Republican party has lost the “Reagan Democrats” and if they want to be players, they have to get them back. I don’t believe they really understand why or how Reagan appealed to that group. They were what got him elected and he knew how to work that. The current group doesn’t seem to have a clue.

Finn McCool (The System isn't Broken; It's Fixed)

January 23rd, 2013
12:00 pm

Blog posting is down to 6 hours a day, now? You think you angry white men can keep your stuff together for 6 hours a day?

I doubt it.

Jefferson

January 23rd, 2013
12:02 pm

Phil don’t work, he knows it thus the retreat. No real comparison.

Aesop's Fables and other Lib Economic Theories

January 23rd, 2013
12:14 pm

I was also wondering about the 6 hour time frame, will the libs be able to make one comment that comes even close to being thought provoking in such a short time period? They can’t even do it with 24 hours on their side.

Nick

January 23rd, 2013
12:17 pm

I wish Phil did not apologize because he believes what many people in this country do, the systems were in place as a crutch for those in need, but the Dems have made it a permanent form of income and dependency. Why should I work and earn $7 or $10 an hour- when I can earn the same without any taxes staying home?

And yeah he earns $45 Million a year, why should be complain? Because even if he comes down to 50% after all the deductions are taken, you are handing the government $22.5M a year for what? They are not taking these tax hikes in and reducing spending, but rather the opposite to spend what additional revenue they took in. I have worked 28 years since I was 16 and after 5 years of being self employed, I am succeeding and making top $- but living and working in NYC- Federal, State and City I am starting at 51% without sales, real estate, payroll, SS and all the other wonderful taxes here in NY. And for this so called leader to tell me I do not pay my fair share is why I regretted supporting the schmuck in 08. And I know of VERY FEW people that have become successful or climbed out of poverty thanks to welfare or the other social programs. What kind of system rewards you for having more kids and gives you more money when you do? There is zero incentive for these people to go out and work and he won because he is promising them these benefits indefinetley and those evil working folk can pay 100% in taxes and it would not make a big different in the scheme of what we are facing that is the sad reality.

Aquagirl

January 23rd, 2013
12:17 pm

I’ve said before that the Republican party has lost the “Reagan Democrats” and if they want to be players, they have to get them back.

It starts with sane, objective observations like Kyle’s. Unfortunately the Republicans made a deal with two devils—talk radio and the Christian Coalition. That worked for a few years but you can only spend so much time screeching about parasites, gays, and socialists before normal folks decide you’re insane. As Kyle pointed out it’s gotten so bad their last presidential candidate had to adopt and spout these views.

Republicans should learn from the Democrats—exorcise (maybe literally) the portion that thinks they’ll win by setting up scary strawmen. Relying on fear and hatred against “those people” is not a long-term strategy. There are only so many Aesops in the world.

Matz

January 23rd, 2013
12:19 pm

You lost me at “Mickelson.”

Just Saying..

January 23rd, 2013
12:20 pm

Alright, good information.

Legislation to address the problem explained here would look like?

Or better to vote no on Obamacare 33 more times?

Aesop's Fables and other Lib Economic Theories

January 23rd, 2013
12:25 pm

Aesops, who happens to be married to one of “those” people.

Republicans should learn from the Democrats—exorcise (maybe literally) the portion that thinks they’ll win by setting up scary strawmen.

The dummycrat party would literally not exist if it didn’t have warehouses full of strawmen. The war on women? Pushing grandma over the cliff?

Our mistake is listening to liberals when they offer advice. We should learn to politely listen, say to them “that’s nice” and then do exactly what Kyle did this morning – articulate sound policy to those willing to hear it. The exact opposite of what they wish us to do – out pander them.

Aesop's Fables and other Lib Economic Theories

January 23rd, 2013
12:28 pm

Rephrase that last little bit – “try to” out pander them.

MANGLER

January 23rd, 2013
12:38 pm

Preach about waiting until marriage to have a baby / don’t allow marriage to everyone who wants it
Refuse to talk about sex in schools outside of only saying “don’t do it” / make them fend for themselves because they got pregnant
Declaring that life starts at the moment of fertilization / eliminate funding for birth control and contraceptive programs
Don’t want to allow abortions / don’t want to help support the child or mother
Scream for smaller government / legislate sexual behavior and personal decisions
All life is sacred / don’t touch the guns
Many mixed signals y’all got

Aquagirl

January 23rd, 2013
12:40 pm

Aesops, who happens to be married to one of “those” people.

You’re married to a low income single parent with child(ren)? I know it’s not kosher to call folks a liar here, but that seems—um, not really possible.

Aesop's Fables and other Lib Economic Theories

January 23rd, 2013
12:41 pm

One of our future articulaters, Rand Paul, left a giant, gaping hole this morning in the dummycrats presidential prospects for 2016.

MarkV

January 23rd, 2013
12:43 pm

Kyle: “It is bad policy to punish people for working harder, no matter how much they earn.”

That’s it in a nutshell. Indeed. Not bad policy, but bad thinking. Some people looking at taxes as “a punishment,” instead of as dues paid for living in a civilized society, and a payment for all that the society is doing to make their earning possible.

Logical Dude

January 23rd, 2013
12:43 pm

A quick glance at the first chart shows someone earning $5000 has about $20,000 in disposable income.

So, a quick glance tells me the yellow shaded area is BS.

Unless they define “disposable income” differently that I do. Nobody will have more disposable income than what they earn.

Skip

January 23rd, 2013
12:44 pm

Except he’s not paying 60% so all this is BS. Or does a child do his taxes? Go back to bed Kyle, you got nothing.

Aesop's Fables and other Lib Economic Theories

January 23rd, 2013
12:45 pm

You’ve divided “those people” into subcategories now, aquagirl?

DeborahinAthens

January 23rd, 2013
12:45 pm

You are so full of it! I am in the next to the highest tax bracket, and I got here by sheer hard work–12 hour days, weekends meeting clients, etc. No one, no one, no one in their right mind would say, “Gee whiz, if I increase my pay by $50,000 I might go into the next bracket and instead of paying 36% I will have to pay 39.5%. I’ll just kick back.” People, if you have a brain, do some calculations. The net amount you put in your pocket is what drives your ambition–unless you are an idiot. Just as important, no employer who sees an increase in sales of his product and needs to ramp up production says, “Gee, my orders are up 100% from last year and I don’t have any more widgets in inventory, but oh, golly, gee, if I hire more production workers, I have to pay more benefits, my costs of doing business will go up. I’ll just ship these last few widgets, and tell those other customers to go buy their widgets at my competitor.” Read my lips, lower taxes do not stimulate economies and create jobs. If that were true, we would not have had two massive recessions and the incredible shucking of jobs under George W. Bush. Under his regime, we had the lowest tax rates in my memory. But you guys keep nattering about it and showing graphs from the the biased Heritage Foundation, and believe it. Meanwhile, I am proud to pay my share of taxes to make this the greatest country in the world, where our roads are paved, we fly safely, our soldier citizens can fight for us without having to ask their Moms to raise money for body armor, our police show up on time, the fire departments are good. You cannot get services for free.

Skip

January 23rd, 2013
12:47 pm

Except he doesn’t pay 60% so all this is BS. Get a 5Th grader to do his taxes so he comes out better.

Lil' Barry Bailout - OBAMAPHONE!!!

January 23rd, 2013
12:48 pm

Legislation to address the problem explained here would look like?
———-

Current policy looks like record poverty, four years of unemployment not seen since the 1930s, and annual trillion-dollar deficits.

JDW

January 23rd, 2013
12:49 pm

“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. ”

Kyle you are ABSOLUTLY RIGHT! Could you please call the powers that be in the Republican Party today and ask them to stop insisting on the asinine means testing laws that have been demanded in the past and have led to this injustice. Benefits should decrease on a percentage basis, say 30 to 40 cents on the dollar, not dollar for dollar as earned income rises.

Dang!

January 23rd, 2013
12:49 pm

Wouldn’t it be nice if Obama would just go ahead and tell us what a “fair share” would be? Even after his latest tax increase on the upper middle class, he is still saying he wants more so that the producers in this country pay their fair share. As it stands now, it is always a little more than they pay now.

saywhat?

January 23rd, 2013
12:50 pm

And the conservative solution to this problem is……..

a) Taper off assistance at a higher income level

b) Lower the amount of assistance given at lower income levels.

c) Raise the minmum wage

d) a and c

The correct conservative answer is of course “b”. Not because it is unfair that people should have to work harder for less, conservatives are quite alright with that.(After all, its what they want teachers and union members to do). They want to make sure that even a crappy income earned by doing backbreaking work for long hours looks desirable in comparison to squeaking by while doing a little less work, getting a little help from the government, but getting to spend a little time with your family.

In other words, to help somebody over a wall, coservatives want to dig a deeper ditch in front of it.

Lil' Barry Bailout - OBAMAPHONE!!!

January 23rd, 2013
12:52 pm

DeborahInAthens: You cannot get services for free.
————

The half of Americans who pay no income taxes do.

Lil' Barry Bailout - OBAMAPHONE!!!

January 23rd, 2013
12:58 pm

The conservative solution is to get Obozo’s foot off the neck of the economy. Unfortunately, the parasites decided to go with the sure thing–the handouts Obozo sends them.

Bruno

January 23rd, 2013
12:59 pm

Kyle: 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.

Kyle: 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.

Aquagirl: but you can only spend so much time screeching about parasites, gays, and socialists before normal folks decide you’re insane.

Obviously people like Aquagirl don’t like the manner in which the message is being delivered (and there is some validity to her point), but in the end the conservative vision for our country (strong, intact families; hard work; self-reliance) creates the best results, both individually and collectively. For whatever reason, the Libs don’t embrace this vision, and seem more focused on validating and subsidizing single parenthood/alternative lifestyles.

The Lib motivation behind this is an embrace of “diversity” and a refusal to “punish” those who make bad choices. And again, there is some validity in this viewpoint. No one wants to live in a Taliban-like society with draconian punishments for anyone who dares to be different. However, promoting “diversity” comes at the expense of “unity”. Not “punishing” those who makes bad choices ultimately supports and enables the bad choices. There has to be a balance.

JDW

January 23rd, 2013
12:59 pm

BTW as for Phil…there is a reason he is not in tax preperation. His top max tax rate is is the 50% range…he gets to deduct those state taxes prior to paying his federal taxes.

Aquagirl

January 23rd, 2013
12:59 pm

You’ve divided “those people” into subcategories now, aquagirl?

“Those people” is a universal concept, so yes, there are subcategories. If you lived in 18th century Spain those people might have been Romani.

The particular group changes but the idea is the same. Those People are not like you, they are dangerous to your family, inferior, and are the cause of society’s ills. You can’t trust them because they’re always waiting to destroy your way of life.

Go back and read some of your posts and you’ll see “those people” are your favorite topic.

Logical Dude

January 23rd, 2013
1:02 pm

Looking deeper, I see that it’s the government assistance that causes “disposable income” to be above earnings.

Yep, still not what *I* would call “disposable income”, but I see and agree with the conclusions that yes, there should be more incentives to move up in earnings.

But not at the expense of penalizing the most needy in the country.

Dang!

January 23rd, 2013
1:03 pm

A more important threshhold is the point at which the mother you described begins to lose benefits with a higher income. As it stands,this person gets:

Section eight assistance or free housing.
food stamps.
earned income credits.
free childcare.
free healthcare.
Etc., etc.

Past a certain point, this all goes away. We have designed a welfare state, disguised as compassion.

Aesop's Fables and other Lib Economic Theories

January 23rd, 2013
1:05 pm

You can’t trust them because they’re always waiting to destroy your way of life.

Look in the mirror, ag, I’m “those people” in the world you live in.

brian

January 23rd, 2013
1:12 pm

enjoy this life rich people because if the religous texst are right, people who have more than they now what to do with [glutney] are going to end up in hell. Remember half the people on this earth do not receive daily food requirements.

Bruno

January 23rd, 2013
1:14 pm

Preach about waiting until marriage to have a baby / don’t allow marriage to everyone who wants it

Kind of a non-sequiter there, Mangler. Last I checked, gay people cannot procreate with their partners.

Refuse to talk about sex in schools outside of only saying “don’t do it” / make them fend for themselves because they got pregnant

The Dem solution?? Hand out contraceptives to elementary school children, refuse to require parental permission for underage abortions.

Declaring that life starts at the moment of fertilization / eliminate funding for birth control and contraceptive programs

In case you skipped biology class, life does begin at the moment of fertilization. And, in case you forgot, all “funding” comes from someone else’s pocket. Why shouldn’t folks pay for their own birth control, especially in light of how cheap condoms are.

Don’t want to allow abortions / don’t want to help support the child or mother

See my 12:59, Mangler.

Scream for smaller government / legislate sexual behavior and personal decisions

My guess is that the majority of conservatives like myself have no interest in legislating anyone’s sexual behavior or personal decisions as long as those decisions don’t harm others.

All life is sacred / don’t touch the guns

Only matched by the hypocrisy on the Left regarding their rejection of the death penalty while simultaneously pushing for unrestricted abortions.

TBone

January 23rd, 2013
1:14 pm

Phil get the hell out of Californication and move to somewhere you can enjoy your own fruits from your labor and not be a slave to the state. I hear Florida is nice until hurricane season.

Logical Dude

January 23rd, 2013
1:16 pm

Kyle: 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.

Exactly right, Kyle. Unfortunately, it seems as if the Republicans don’t care at all about low income earners at all. I know it’s not totally true, but almost every national/state message regarding low income earners makes it look like they are “takers”, “moochers”, and “that 47% that will vote for Obama”.
IF Republicans ever get a good message again, they’ll bring good solutions for all earners, not just whine about class warfare when taxes might go up on the “rich”.

td

January 23rd, 2013
1:16 pm

MarkV

January 23rd, 2013
12:43 pm

Kyle: “It is bad policy to punish people for working harder, no matter how much they earn.”

That’s it in a nutshell. Indeed. Not bad policy, but bad thinking. Some people looking at taxes as “a punishment,” instead of as dues paid for living in a civilized society, and a payment for all that the society is doing to make their earning possible.

Please enlighten us to what the 47% that pay no dues provide to the “civilized society”? What contributions do they make?

Bruno

January 23rd, 2013
1:18 pm

Looking deeper, I see that it’s the government assistance that causes “disposable income” to be above earnings.

Yep, still not what *I* would call “disposable income”, but I see and agree with the conclusions that yes, there should be more incentives to move up in earnings.

Kind of fun watching that dim bulb grow a little brighter now and again…….

Aquagirl

January 23rd, 2013
1:22 pm

Look in the mirror, ag, I’m “those people” in the world you live in.

Why would you say that? If you’re really a living, walking, breathing stereotype of “those people” you’d be the first one I’d ever met. Did you climb out of a novel or TV show? People IRL aren’t like that. And it’s why I no longer vote Republican—I’m not convinced Those People Of The 47% are lying on their couches plotting to get my money, when they aren’t in line at the grocery store buying steak and beer next to their EBT stuff. Or fitting rimz on their car or whatever you think fills the stereotypical Taker’s days.

On the other hand you think in absolutes so maybe you really are a Sith Lord, complete with scary facial features and/or fantastically evil laugh. Picturing Darth Maul on a keyboard is kind of amusing.

Logical Dude

January 23rd, 2013
1:25 pm

Bruno: Kind of fun watching that dim bulb grow a little brighter now and again…

Ain’t it though? Like I said in my first post “at first glance” , and like I said in my second post “Looking Deeper”.

Now, how can Republicans adjust their message that yes, they actually care about these folks earning under $20,000 a year?

Bruno

January 23rd, 2013
1:27 pm

The particular group changes but the idea is the same. Those People are not like you, they are dangerous to your family, inferior, and are the cause of society’s ills. You can’t trust them because they’re always waiting to destroy your way of life.

So, praytell, Aquagirl, how is this description any different from the average Lib’s feeling toward those who call themselves “conservative”??

Once again, you Libs keep deluding yourselves that you’re somehow better than the average Con. You’re not.

td

January 23rd, 2013
1:35 pm

What happens if that single mom with one child making $7.50 or $10 an hour had been married to the father of the child and he was making and additional $7.50 or $10 an hour? It seems to me that having children out of wedlock or having children before you have an education or marketable skill set is the real problem.

Lil' Barry Bailout - OBAMAPHONE!!!

January 23rd, 2013
1:38 pm

JDW: BTW as for Phil…there is a reason he is not in tax preperation. His top max tax rate is is the 50% range…he gets to deduct those state taxes prior to paying his federal taxes.
——–

Wrong. At his income level, the AMT would kick in, essentially eliminating the deduction for state taxes. Been there…

commoncents

January 23rd, 2013
1:38 pm

Logical Dude: “Now, how can Republicans adjust their message that yes, they actually care about these folks earning under $20,000 a year?”

If those folks earning less than $20,000 listened and heeded the advice, the class wouldn’t be filled with single parents. If the evil republicans reduced benefit amounts, those who worked harder/longer/in the first place would see an immediate value in their productivity, and possibly be inclined to continue.

The republicans in congress care, but most of them are too stupid to relay that message properly on the national level.

Jefferson

January 23rd, 2013
1:47 pm

Those born with the silver spoon never truly understand the working poor, but they talk about them.

1961_Xer

January 23rd, 2013
1:52 pm

Nobody will have more disposable income than what they earn.

Sure they will. Refundable Tax Credits. SNAP. How many more sources of unearned disposable income do you need? We’re the Federal and State governments, and we have plenty.

1961_Xer

January 23rd, 2013
1:56 pm

The republicans in congress care, but most of them are too stupid to relay that message properly on the national level.

“Tough love” does not invite the votes. Appeals of personal responsibility does not invite votes. Cutting them off the dole does not invite votes.

If you are giving me $xxx per week, no amount of reasoning/logic/love behind taking that $xxx from me is going to get me to vote for you.

Bruno

January 23rd, 2013
1:57 pm

Now, how can Republicans adjust their message that yes, they actually care about these folks earning under $20,000 a year?

LD–I can only answer your question by giving you my background. I grew up in the poorest family in town, primarily due to the fact that my father was a compulsive gambler. My parents divorced when I was about 13, leaving my mother to raise us all by her lonesome. Although we qualified for state assistance, we chose not to accept it, choosing to work our way out of poverty instead. As such, my mom worked 3 jobs while all of us kids took on jobs as well. My first full-time job was at age 11, and I haven’t stopped working since.

Quite frankly, I don’t feel that the State owes anyone anything other than an opportunity. In my case, I studied hard, aced my college entrance exams, and was accepted to a prestigious engineering school (Harvey Mudd College).

Obviously not everyone can replicate my pathway, but where there’s a will, there’s a way.

mike

January 23rd, 2013
1:58 pm

Yes it is terrible that ole Phil has to pay more taxes on all the money he earns because of his golfing skills. I see he is really struggling like all those working poor families, like all those soldiers and their families, like all those eldery people who have worked their whole lives and just about anybody else who is struggling everyday to survive. It is pretty sad this is all you goobers talk about each and everyday.