Home > Politics > I’m on Welfare?

I’m on Welfare?

As I alluded to in an earlier post, we do not pay income tax.  I don’t consider myself poor, but the Federal government does.  By law I have to fill out a tax return in which the government sends me money.  Now many would say they are just getting back money they put in, but currently I put next to nothing in!  My monthly paycheck almost always shows no contribution to Federal Income tax.  I do pay Social Security Taxes and Medicare taxes, so in the end the Federal government does get some money from me.

As I was doing my taxes this year I got to the question about IRA contributions.  Since we have a Roth 401K I didn’t really consider opening an IRA, but since the question was there I thought I’d figure out what happened if I filled something in.  Through repeatedly entering various figures and recording the outcome (I know there is probably a chart somewhere, but this was more fun) I determined that the government will give me about 30 cents for every dollar I put in an IRA.

What is even more interesting is that if my wife makes a contribution we get about 41 cents on the dollar.  The peak ratio is if we put $1,275 into an IRA for my wife.  If we do that the government increases our tax refund by $532, which means that for $743 we can have a $1,275 IRA.

Part of me says “Free money, what are you waiting for”, but part of me also sees this as yet another form of welfare.  Still another part sees this as an offset for state, local, and corporate taxes some of which we never actually see.  If you have an opinion let me know.

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Categories: Politics
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