The results are clear: you should move to Hawaii. Based on the facts delineated above, a family would receive $49,175 in tax free benefits. Figuring a combined federal, state and social security tax rate of 28%, the amount of tax free benefits is equivalent to $68,298 of earnings. Since the vast majority of Americans do not earn nearly that much, the welfare participants are much better off than the average hardworking American with two children. There are 19 states in which you would receive over $30,000 of benefits from these programs. Even if you reduce the projected combined tax rate to 25% percent, the welfare recipient would be getting what would be equal to $40,000 in wages. That is with taking advantage of only seven of the 126 federal anti-poverty programs.
Tanner discussed what he found had changed since the last report. One of the things he pointed out was that in constant 2013 dollars that 33 of 51 states (including D.C.) had increased benefits since 1995. That means that since the new law, with just the seven programs included, it has become more beneficial -- not worse -- to be on welfare. Tanner cited that one of the hallmarks of the 1996 bill was the work requirement. He said “We were very surprised to see how the work participation has not been enforced.” Only 16 states had a work participation rate of over 50%. When asked if there was a correlation between red states and lower welfare and higher work enforcement, Tanner said “That is quite clear.” Only three of the sixteen states with over 50% work participation are blue states. Of the 18 states that decreased their benefits since 1995, only three could be considered blue states. Tanner pointed to Illinois as a particular anomaly as it was in both groups.
Tanner made clear that he thought there had been little real change since the law was enacted. He felt there are two principle reasons: 1) the law revised only four of the 126 federal programs; and 2) the federal government is not enforcing the work requirement. Once again Michael Tanner needs to be applauded for his detailed and sophisticated analysis of the reality of where the welfare state stands today. He said there has been much greater media focus on this year’s study than the one back in 1995. The question is, with all the animosity in Congress and a President who likes handing out OPM (other people’s money), whether it will have any effect.