78-12-B5
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Pay Raise[edit]
Transcript[edit]Wouldn't you think a married man with two children to support earning $4,800 a year -- $400 a month -- would like to up that to $600 or even $800 a month? The answer, of course, is "yes" -- under ordinary circumstances. But in our wonder world of welfare the more he earns the less he actually has. In fact, if he really scored and went to $12,000 a year, he'd have less income than when he was making $4,800. In the aftermath of Proposition 13 and during some of the debate in Washington over possible tax cuts, there were demogogic charges that tax cutting was aimed at the poor. Senator McGovern was one among others who declared that those who sought tax cuts had no compassion for the needy. The implication, of course, was that all of government's spending is legitimate and the only way to reduce it would be to cut back on benefits to the poor. This is not only demogogery, it ignores facts with regard to government costs. The General Accounting Office in Washington estimates that the federal government alone loses $25 billion a year in fraud. It i s true, however, that many people believe welfare itself is a sinkhol e where a lot of tax dollars disappear without doing any real good. They believe that welfare has become a fixed institution where the effort is not directed toward putting the needy back on their feet, making them self supporting. Well, now two economists at U.S.C., Arthur Laffer and Chris Petruzzelli, have put together some figures which indicate that the people are right to be suspicious. We aren't salvaging people; we are making them permanent clients of a professional group of welfarists whose careers depend on the preservation of poverty. Let's go back to that man I mentioned earlier, the fellow with wife and two children and a $400 a month pay check. He is a deserving member of the working poor, eligible for substantial tax free welfare payments, food stamps, low income housing and all the other perquisites that go with welfare. His net income wages plus government benefits isn't $400 -- it's actually $810.49. If he didn't have any $400 salary at all, his income would be $718, so he's actually working each month for $92.49. Now, suppose he gets a 50% raise and finds himself earning $600 a month -- taxable, of course (including tax and social security). His net monthly income drops from $810.49 to $784.76. Well, maybe he should work harder and double his original salary -- earn $800 a month. He does and his net family income drops to $773.82. Both of those raises, 50% and 100% cost him $1.05 for every additional dollar he earned. Can you take more? He really goes to work and starts earning $1000 a month. Finally, his monthly income goes up, all the way to $795.94 -- only, $14.55 less than he had when he was earning $400 a month. Do you suppose this explains some of our unemployment? If he doesn't work at all he gets $718 a month. If he earns $12,000 a year, he gets $795.94 a month. This is Ronald Reagan. Thanks for listening. |
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