I have always believed that the growth of government, in regard to social services, is irrelevant. However, I am a strong advocate on how specifically it is used.
Some countries like The European Union treat social service payments differently than we do.
The Working Family Payment in Europe, for example, works by giving a tax-free payment each week, to people on low incomes who have at least one child who lives with them and is financially dependent on them.
The payment is linked to the number of children you have and the income you are in receipt of.
If your income is less than the income limit for the size of your family, you receive a payment of 60 percent of the difference.
If you have three children, your weekly earned income must be less than 723 euros to qualify.
For example, if your net weekly income is 550 euros, the amount you would qualify for is 104 euros. And how that’s worked out is 723 euros – 550 euros = 173 euros x 60 percent = 103.80 euros (the payment is rounded up to the nearest euro).
So in the United States, applying the same formula for a family of three, the annual minimum income would probably be $35,000 a year, or $673 a week.
So if Sam, for example, is working as a customer service rep and is only bringing in $500 a week (or $26,000 a year), the government-assisted payment would be $103.08 ($173 at 60 percent difference, assuming we use the same Working Family Payment formula). This amount would represent an additional 20.6 percent of government assisted income.
The assisted amount, $5,360.16, becomes even more interesting when you look at our way of attempting to provide that assistance, on the back end: The IRS Child Care and Earned Income Credit.
Based on the above information, Sam would receive a $2,000 Child Care deduction (which will release $1,400) and $2,450 on the Earned Income Credit for a total return in cash of $3,850.
Maybe even sadder with this formula is that it’s based on filing taxes, thus 2019 situations get rectified- the following year 2020 , and so on, thus a 16 month delay in payouts- and yes the Government is using that money for making interest, for them, not you.
The $3,850 tax refund will be a delayed 15 percent increased income payout while the $5,360 represents a 21 percent payout. The European example above represents a 19 percent income assisted related payout.
Should the government just provide 21 percent related income bonuses to low income people trying to stay above the poverty line? Europe thinks it’s a great idea. And I believe we have a presidential candidate (no endorsement) that I believe is showing a “rough sketch” of this now.
Professor Anthony Rivieccio, MBA PFA is the founder and CEO of The Financial Advisors Group, celebrating its 24th year as a fee-only financial planning firm specializing in solving one’s financial problems. Mr. Rivieccio, a recognized financial expert since 1986, has been featured by many national and local media including: Kiplinger’s Personal Finance, The New York Post, News 12 The Bronx, Bloomberg News Radio, BronxNet Television, the Norwood News, The West Side Manhattan Gazette, Labor Press Magazine, Financial Planning Magazine, WINS 1010 Radio, The Bronx News, thisisthebronx.com and The Bronx Chronicle. Mr. Rivieccio is also currently an Adjunct Professor of Business, Finance & Accounting for both, City University of New York & Monroe College, a Private University. Financial Focus Interactive is now an app and a place where one can: Read, Listen, Watch Talk & Learn about Financial Solutions with likeminded people and a live financial advisor. Financial Focus Interactive app can be found on the Google Play Playstore or on or internet app at: https://www.financialfocus.app For financial assistance, Anthony can be reached at (347) 575-5045.
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Why is Sam not required to prove that he is making the effort to improve his financial status and wean him and his wife off the easily accessible entitlements. Yet you are asking me to supplement his income from my hard work and and effort at cost to me- by him not being forced to improve his condition? Being poor and living in poverty is highly subjective and if you observe the condition of inner city urbanites and illegal immigrants long enough one could easily conclude more often than not that being poor is in fact a self imposed condition. People like to be taken care of and in the City of New York and its Sanctuary City status has become a magnet for tens of thousands that wish for others to pay for their living expenses and their large families- by calling themselves poor.