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Ever more incentives to greater dependence

The payroll tax that supports Social Security takes a bigger toll on the income of low-income workers than it does from the paychecks of more highly paid people.

This hurts the ability of the working poor to save money and pass on assets to their families.

Such concerns led to creation of the federal Earned Income Tax Credit, which often results in people who pay no income tax receiving sizeable checks instead.

In 2012, Sen. Jay Rockefeller said that almost 60,000 working West Virginians received an EITC credit - average value of more then $2,000 - for a grand collective income gain of approximately $328 million.

Still, too few poor people are able to climb out of the dependency trap.

Now the advocates for the poor argue that almost half of West Virginians have no savings and are "liquid asset poor." That's not surprising if people never see a chunk of their paychecks to begin with.

To combat "liquid asset poverty," advocates want West Virginia to loosen the requirement that people spend down what assets they do have - cars and houses aren't counted anyway- to qualify for additional public assistance.

Then, they argue, the poor could save more and not be "liquid asset poor."

This is all getting pretty tortured. The financial rewards of welfare now outweigh, in some cases, the rewards for working.

But the proponents of the welfare state want to extend that still further.

The District of Columbia and 23 states have already eliminated asset tests for families who apply for Medicaid. They no longer have to prove that they have depleted their savings and assets to get assistance.

Advocates now want West Virginia 1) to increase the minimum wage, 2) adopt a state Earned Income Tax Credit, and 3) eliminate the requirement to spend down one's own assets to qualify for Medicaid and Temporary Assistance to Needy Families.

This would make dependence even more attractive, and weaken the incentives to attend school and pursue education and training even further.

Public assistance to people who really need it is one thing. But encouraging dependence and undercutting the incentives to get education and training - and then decrying tardiness, high dropout rates and low educational attainment - is just poor policy.

It's cruel, too.

The poor deserve much richer lives than a government that encourages dependence for political reasons will ever give them.

 


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