Do people on welfare pay tax?

[Deleted]

I had a discussion with a FB friend today about welfare and, he seems to think that he does pay tax, while i don't really see it so.
The money they recieve comes from tax, and while they pay tax out of the tax money they recieve, I can't see it as the same as someone who works and pays tax out of their paycheck.

Am i seeing this wrong and what is your opinion about it?

[Djuntas]

We'll, they spend that money somewhere, be it grocceries or whatnot. So that money does help the economy in someway.

[Donald Hellscream]

of course they do, sure it may be tax payers money but that doesn't all of sudden mean that what they are paying is not taxes, besides when they go out to shop groceries and what have you the money goes back into circulation which is good for the economy.

[Deleted]

I've got "Aktivitetsersättning" and it is taxed.

[lokithor]

I had a discussion with a FB friend today about welfare and, he seems to think that he does pay tax, while i don't really see it so.
The money they recieve comes from tax, and while they pay tax out of the tax money they recieve, I can't see it as the same as someone who works and pays tax out of their paycheck.

Am i seeing this wrong and what is your opinion about it?

Don't know if unemployment is really called welfare, but that is taxed.

[jetriot]

If you are talking about income tax, no he does not pay income tax if he is on welfare. As the poster above mentioned, unemployment payments are taxed. Unemployment payments are complicated subject but unemployment(in theory) is supposed to be paid out of an insurance that employers pay into. Essentially you get paid less money when you have a job so that employers can pay into a fund that will support you if you lose your job for whatever reason. That is considered income and is taxed as such.

That said something around 40% of Americans do not pay income tax when the balance sheet comes back after tax day. In fact, many people get money back through 'negative tax rates' such as earned income tax credits, student tax incentives, child tax credits and more.

Income is not the only thing that is taxed though. There is no escaping sales taxes unless you operate solely in a black market. There is also property taxes, fees, fines, license plates, licensing, etc. Even things you don't pay directly such as corporate taxes, bank transfer taxes, payroll taxes and more are typically passed on to you as a consumer in the form of higher prices on goods and services that you consume.

I have to wonder though why the topic comes up. Surely, he doesn't think he is still contributing to society in the positive when it comes to taxes. If he is on welfare he is currently taking more from the system than he is giving. There is not neccasarily anything wrong with that, as long as he realizes this and is using welfare as a safety net to get back on his feet and once again become a productive member of society.

[Wilian]

In Finland, all goverment based money has 20% tax to them.

[snaxattax]

social assistance payments are generally considered taxable income, but i can't imagine that they actually amount to enough to actually warrant federal taxes. he certainly pays sales taxes, though.

[OzoAndIndi]

Prob taxed as income but it's prob not enough to have to pay anything. Now I'm wondering if they get a return on what's taxed from it? o.O

[Deleted]

Having been on welfare, I know quite a bit about this.

In Finland, first of all we pay a value added tax (VAT) on anything we buy. Usually it's 24%, sometimes 13%.

Then there's the "pay as you earn" -tax, or withholding tax, however it's translated. This means your welfare (whichever kind it might be) gets taxed, but you also get it back as tax returns from the earlier year in December. The actual percentage is somewhat negotiable with the tax office. If you're a student, getting the student grant, it's 10%. So, each month, 10% of your student grant gets taxed, but you get all of it back in December from the earlier year, assuming you didn't earn over the limit which you're allowed to each year.

If you're unemployed, the percentage is 20%, however, I'm fairly sure you don't get the full 20% back. I'm not entirely sure about how much the amount you get back is, but I've been unemployed for years in the past, and I sure as hell didn't get 20% x 12 of my unemployment benefits, ever. So, I'm saying a part of that goes to some kind of limbo.

If you're on straight welfare (and actually, often Finnish unemployed people can be, meaning, even if you get unemployment benefits + 80% of your rent, you can still quite often get more from the welfare office), the number is 0%. Meaning, anything you get from the ACTUAL welfare office isn't taxed, at all.

Also, there used to be (although nowadays this doesn't really exist anymore) unpaid internships, during which you'd get your normal unemployment benefits, plus a tax free sum per workday. This used to be 9€, so almost 200€/month more tax free, since there's 21.5 workdays in a month.

So that's about it in a nutshell for Finland.

[chazus]

To clarify, are you implying that money from welfare comes from tax dollars, so is a 'net positive' tax, while taxes from things you spend (groceries, etc), has a 'negative' tax?

Example:
You receive $500, money from taxpayers, taxes.
You spend $8 in taxes on goods that same month.

Technically, you have not 'been taxed', as your net taxes is above 0. However you still technically 'got taxed' on that $8, and most places you also get taxed (or receive less from your refund) on that $500 you received.

Notably, I was on Unemployment for a period, and did not have any money withdrawn from it for taxes. It was not deducted from my tax return either. Why, I don't know, but I imagine that I fell into a low enough tax bracket that it got waived. I know people who have been on unemployment benefits for several years now. Obviously, if their ONLY income is welfare/unemployment... You'd think they owe a portion of that, or would have to pay money on their tax return, yet they don't. The tax/welfare system is too complicated for me to understand right this moment. Ask me again next year after I've completed my business/econ courses :P

[Spectral]

In the United States, people that are working but receiving welfare will typically be below the federally taxed threshold, especially if they have kids, resulting in them receiving negative income tax. This is not uniformly true though. Many people that receive this sort of aid still pay taxes though as pointed out by chazus above.

[drwelfare]

Here in the US if your on welfare you dont pay sales taxes on things bought with foodstamps.
Also if your on welfare and have kids at the end of the year you will get the Earned Income Tax Credit which will allow you to get typically several thousand dollars as a "refund" despite you having paid no income tax.
Unemployment is counted as income and can be taxes.

[Xarkan]

I had a discussion with a FB friend today about welfare and, he seems to think that he does pay tax, while i don't really see it so.
The money they recieve comes from tax, and while they pay tax out of the tax money they recieve, I can't see it as the same as someone who works and pays tax out of their paycheck.

Am i seeing this wrong and what is your opinion about it?

I am not sure what you are arguing

Does the prime minister (or statsminister) of Sweden pay taxes? His income is also entirely payed for by taxes (except for possible bribes.. but those do not count for taxable income anyhow)
Similarly people on various forms of support receive income payed for by taxes and of their income they pay taxes (as i understand it)

If public employees pay taxes in your interpretation of it then so do people that receive these forms of support incomes. It does not make the state richer though

[Deleted]

Well, economically, I'd say you have to look at the net result at death or some specified time of measurement and see if it's a gain or loss.

There's more to people and their lives than economics though. If you're gonna see whether someone is contributing money to the state then of course you probably aren't gonna be making a surplus to the state if you're on welfare. People on welfare may have, so to speak, "paid for their own welfare" though. For general purposes, I'd say whoever does pay tax in the records pay taxes, but the net result is probably a decifit for the state.

[yunito]

car tax for 1,dependent on what state u live. certain merchandise over certain price are charge sale tax.
in ct,us used the be anything under 49.99 u didn't paid sale tax. since last year it was change and now u paid tax for any amount.....
man i want to move out this sinking shit of a state.

[Deleted]

In the UK people on Jobseeker's Allowance don't pay income tax. However, of the £50 - £70 pounds a week they get, most people will spend it on food, utilities and housing. They will be paying VAT on goods they buy, the companies should (unless you happen to be called Google. Or Starbucks. Or Vodafone... etc etc) pay tax on the income, then supermarket's suppliers should be paying tax and so on and so forth. If you add it all up and go far enough down stream you'll probably find that most of the benefits paid to the unemployed eventually come back to the government as some kind of tax. A much smaller proportion of a wealthy person's income will return in such a fashion.

[lockedout]

I had a discussion with a FB friend today about welfare and, he seems to think that he does pay tax, while i don't really see it so.
The money they recieve comes from tax, and while they pay tax out of the tax money they recieve, I can't see it as the same as someone who works and pays tax out of their paycheck.

Am i seeing this wrong and what is your opinion about it?

They do not file yearly income tax.
They do pay tax on items like everyone else, what is your question?

---------- Post added 2013-06-22 at 02:15 AM ----------

Notably, I was on Unemployment for a period, and did not have any money withdrawn from it for taxes.

Unemployment and welfare are totally different.
If you receive unemployment you have to pay income tax on it.
You can have it taken out every week or pay it at the end of the year.

[MaximusRex]

I had a discussion with a FB friend today about welfare and, he seems to think that he does pay tax, while i don't really see it so.
The money they receive comes from tax, and while they pay tax out of the tax money they recieve, I can't see it as the same as someone who works and pays tax out of their paycheck.

Am i seeing this wrong and what is your opinion about it?

Depends on the Welfare they are getting I suppose, and maybe what is being called Welfare. In the US only about 8% of people who get public assistance of some kind are 100% dependant on it, meaning they have other sources of income. And even if your income is low enough to avoid paying Income tax, there are other payroll taxes that everyone who has a job has to pay.

[Deleted]

all people pay tax its called VAT