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.
https://fee.org/media/17757/welfare_cliff.png?width=600&heig...
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'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? ;)
Wow, that's a fantastic analogy, thank you
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.