I participate in quite a few forums. The increase to taxes has been a hot topic on just about every forum I participate in. While taxes on everyone have gone up for most of us and we are now expected to make due with less nothing has happened to entitlement spending. While entitlements may not seem like a big deal to many people, if you’re a tax payer they probably should. I decided to crunch a few numbers and show a comparison that demonstrates just how entitlements work.



Example 1: Single mother with 3 children who earns $25,000 per year and receives $500.00 per month in child support. Because of her low income she receives subsidized housing that also includes utilities. She receives EBT of $300.00 per month(Food stamps), government funded healthcare and government subsidized childcare. (example 1 is a real person and these are actual figures)



Figures below are monthly



Gross Income $ 2,083.33

Child Support $ 500.00

SS and MC $ (159.37)

State Tax $

Fed Tax $

Insurance $

__________________________

Total Net Income $ 2,423.96

Housing $ (325.00)

Food $ (200.00)

Child Care $ (160.00)

Utilities $

__________________________

Disposable income $ 1,738.96

Example2: Single mother with 3 children who earns $55,000 per year and receives no government benefits.



$55K Earned Income

Gross Income P/R $ 4,325.00

Child Support $ 500.00

SS and MC $ (330.86)

State Tax $ (113.60)

Fed Tax $ (307.83)

Insurance $ (250.00)

__________________________

Total Net Income $ 3,822.71

Housing $ (975.00)

Food $ (500.00)

Child Care $ (2,400.00)

Utilities $ (200.00)

__________________________

Disposable income $ (252.29)



Here is where the fun really starts.



Example 1 qualifies for the earned income credit. The max earned income credit benefit for a single income earner with 3 children is $5,891.00 per year. Example 1 also qualifies for a dependent care tax credit of $556.80 per year giving her an additional $6,447.80 of disposable income each year.

Example 2 does not qualify for the earned income credit. Example 1 does however qualify for the dependent care tax credit which will give her a tax credit of $1,200. The $1,200 is still not enough to cover her monthly deficit of $252.59.