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Comment by kartan | Hacker News Reader

> Out-of-pocket medical spending jumps once the money hits people’s bank accounts.

It is a bad thing that tax withholding is one of the few ways Americans can have savings. When you live check to check this can be your only option.

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That tax withholding is the only way that many Americans manage to save speaks more to a lack of self-control than anything else.

If Uncle Sam can save a lump-sum for you by deducting from your paycheck, you could have done the same (in fact, better) with a bit of resolve and a bank account.

It's not necessarily that simple.

I would say that for most Americans who are cash poor, they intentionally do not optimize their taxes to break even, but rather to ensure they never end up owing the government money at the end of the year.

The rationale for this is pretty simple. Even if you're poor, $50 a month in extra income isn't going to make or break you, but an unexpected bill for $600 in April can really mess you up. On the other hand, just going with max withholdings and discovering in April that you get $600 back from the government is a nice bonus.

It's not the "optimal" decision from a finance perspective, but for a lot of people it works better in real life.

It is still better to save an extra $50 in your own bank account than let the government pay you 0% interest in it.

But not when - instead of being some arbitrary number like $50 - it’s a vague and unknown future liability.

Most people end up with some mix of side income and tax breaks that are hard to predict in advance. If you’re wealthy and you’re off by $500, so what. But if you’re poor and you were off by $500, it can be devastating.

So again, I think it’s rational behavior for some whose life is optimized around avoiding cash flow surprises than optimized amount maximizing return on capital.

Not if you'd otherwise spend the extra $50 each month.

> That tax withholding is the only way that many Americans manage to save speaks more to a lack of self-control than anything else.

I understand that it may seem so. But, when there is millions of Americans in that situation then it is a systemic problem not a personal one.

There is a lot of on-line resources about this topic. e.g. https://www.google.com/search?q=the+cost+of+being+poor

Yeah there was a great breakdown of this when the representative from Irvine, California grilled CEO Jaimie Dimon, a bank teller who lives in Irvine makes $15 an hour, basically such a person if they have their own apartment will be forced to choose between having food and having a phone. We have kept salaries frozen for so many decades that we have impoverished the majority of working people to a ridiculous level. Asking people to go get more education is a joke when PHD's often live in their vehicle or live within homeless shelters as part time adjunct staff.

It’s rich that the representative from Irvine thinks hourly pay is the problem and not the cost of housing in CA. I am in the 96th percentile of earners and there is no way my family could afford to live in Irvine.

Housing cost is a problem in California (and New York, and D.C.). But wage stagnation is a problem everywhere. That rents are too high in Irvine doesn't negate the fact that wages are too low as well.

If the company location is based in Irvine, and they have entry level positions, you shouldn't have to live 2 hours away to be able to afford to work there.

Maybe they should move?

That is the fundamental problem isn't it. Mobility.

Why would you expect that a bank teller has their own apartment? Your own apartment isn’t some kind of birthright. I had roommates until I was 27.

I disagree. Throughout most of human history families have been able to own their own home. If someone was unable to own their own home they were free to establish a homestead on some unclaimed land. I conclude that the ability to own your own home is part of the social contract.

I realize that in many cases the land was technically owned by the gentry but I am talking about the day to day reality.

Throughout most of North American history post-Columbus, sure. The rest of history was what we developed world moderns would call grinding poverty for most people at most times. And the only reason peasants had land (when they did actually own land) is because it was their source of sustenance. It wasn’t the place for idleness that land is for most people in the developed world.

Your average person certainly had less wealth in the past, but it seems to me that they had more independence which is what, at least for me, a home represents.

It seems to me that the social contract implicit in the industrial revolution was that average people gave up some independence (e.g. by being managed in factories rather than being artisans or farmers) in exchange for material prosperity. Now that the material prosperity side of that bargain is breaking down, it's understandable that people are upset.

I don't think the fact that peasants supported themselves through farming is directly relevant since we are talking about where people live not how they work. That is, the fact that they also used their land for their livelihood does not change the fact that they also lived there.

Are you familiar with how feudal economies worked? People were restricted in feudal economies in a way that we would find horrifying. Peasants were legally bound to the land they were born on. As in, they were not allowed to leave unless their the lord they were bound to approved.

The industrial revolution was a weird time. Our ability to make stuff vastly outstripped population growth. And there was an entire continent (North America) that excess Europeans and Americans could move to. That process is done. Now we’re back to the perpetual grind.

Someone who has full time job should have some semblance of independence.

I'm dreading the day that homes are just owned by your employer so you can keep the slaves working for you forever.

And then we will live in our cars, and they're already enforcing that as illegal too :)

It's not "they" or "the rich" that are doing this. It's your fellow man that you probably vote along side.

Support for the AMA, support for the insurance corporations, local regressive housing policies. This didn't come from some evil lizard overlord.

It came from your friends and neighbours who have arrayed themselves against you. If you don't want to draw battle lines with them, fine, but right now you're fighting shadows.

If you were the one who downvoted me then it's a shame because we agree.

Firstly, I am an anarchist. I don't vote for anyone. Secondly, anyone, be they politician or just voter, who is trying to enact these thoroughly horrific laws and policies is just flat out telling us how to live our lives while processing it.

I have not had a lease in 3 years. I can't afford anything. So that's where I'm coming from.

Just to answer one part: I follow /. etiquette. I don't vote in threads I participate in.

Also the website does not permit downvoting responses so you know it wasn't me who voted your newer response down. So you can then conclude it's also possible that people disagree with your original post and that the voting was by someone else.

I think it is reasonable as a society that we should have options for living alone that are affordable.. or otherwise pay living wages.

Based on what do you think that? You can be happy, healthy, and safe, even if you have to share a kitchen and bathroom.

Single-resident dwellings are the exception throughout human history.

Not that I necessarily disagree with you - I'm still figuring out how exactly to think about this issue.

It’s based on universal human rights.

Which ones, though?

I can imagine a utopian city where everyone lives in dorms and uses public dining and bath facilities. In that thought experiment, it's hard to feel like anyone's rights are being trampled.

And it's not clear that sharing a flat with another person has to be a worse arrangement than that.

PS: Did you really feel that anyone would find that answer helpful? Or was it just a veiled rendition of "clearly, if you disagree with me then you are a priori too morally bankrupt to have this conversation"? The latter attitude is poor approach to dealing with people who might otherwise be persuaded to your way of thinking.

Everywhere in the US? Because that’s not a reasonable expectation in places like SF, NYC or even Irvine.

There are plenty of places in the US where a teller making $15/hr could have their own apartment.

We don't expect it. We expect all but the rich to be continually milked and bled more and more, their productivity harvested and their income withered, and with it their lives - healthcare, living quarters, food, family, leisure, whatever can be given up to give the rich more - until it can be reduced no more.

That's what we expect; we only aspire to better things.

You’re being downvoted, but you raise an important dynamic. When we bargain down and lower our expectations, who benefits? If we pack ourselves into tighter living quarters and don’t pocket the savings, or pay higher insurance premiums for no more or better care, where do you suppose the benefit goes?

The disadvantaged need to step up their bargaining game. When have you ever heard of a businessperson say, “I can’t ask for this benefit, I haven’t done anything to deserve it?” Their whole ethos is to always ask for more to maximize profits and they’ve been quite successful over the years, clearly.

Imagine if the lower income earners rose up to meet the challenge posed by the profiteers.

Having a full time job and not being able to afford to have your own place is simply miserable.

That’s an absurd level of luxury that people have become accommodated to. To the nearest percentage point, 0% of people in human history have grown up with the expectation of an entire dwelling as their personal domain. It’s wasteful and absurd. Resources like showers which are used 15 minutes a day should not sit idly all day waiting for a single person.

While certain facilities may have been shared, my understanding is that generally speaking people have been able to have a space that they or at least their family owned. Personally, I would be thrilled to own the place I live even if things like bathrooms were shared.

That's honestly a horrible way of looking at things. Having privacy in your own home should not be seen as luxury. Until now, at least in my country, having your own place was seen as normal and healthy. We should not go back and think "that was just a luxury". That could be done by 1) building more housing or 2) getting serious about remote working.

I've definitely been there and I think it only would have sucked had I believed my income would never rise.

Which to the greater point - what should the lifestyle expectation be on entry level jobs?

And why is that, that you think so?

Why should anyone have the right to their own place?

Asking from a point of genuine curiosity. Had not thought about that much until now.

Not necessarily -- perhaps you're in debt day-to-day. This is the reality for many Americans.

78% of American workers live pay cheque to pay cheque.

I would suggest that of the two possible hypotheses, the one where the system itself doesn't let them do anything else, might be the one more worth examining than the one that betrays a complete lack of empathy with your fellow citizens.

The bottom 78% of incomes varies widely, so we know it's a result of spending, not earning.

There’s this idea about poverty and cognitive control competing. It may be harder to save when you’re already poor

You will also easier end up poor if you have bad cognitive control.

> You will also easier end up poor if you have bad cognitive control.

My personal experience is that many middle class people has little control. But, the effect on them is small. That clothes that they do not need or that extra vacations are not going to make them poor.

But, I am sure that in very extreme cases like gambling addiction middle class people can become poor.

humans are gonna be humans, we need societies that work with actual humans and their faults rather than just wishing humans were perfect.

You're forgetting about the Earned Income Tax Credit and other tax credits. Not all money paid out by the IRS is from wage withholding.

How is it the only option? If withholding is less, what’s stopping people from saving the reduction? A refund is essentially an interest free loan repayment from the government. Refunds should ideally be zero.

> How is it the only option?

It’s not but it’s a lot easier for many people if they don’t realize they have the money.

> If withholding is less, what’s stopping people from saving the reduction?

Reality. It’s no different then walking around town with a couples $20 bills vs walking around with your pockets empty. Sure you could just not spend any of it but it’s a hell of a lot easier if you don’t even have the option.

Not having cash on hand and being forced to make due with less is surprisingly effective.

It's an extremely short term solution to make everyone feel happy and warm inside without any long term results. The lack of impulse control won't sudden vanish once the refund arrives, and they will be back in that situation again a few short months after.

> The lack of impulse control won't sudden vanish once the refund arrives

I see why you reason like this as the reality seems counter-intuitive. The cause is poverty the effect is harder times taking economic sound decisions. Not the other way around.

One of the many articles about the topic: https://newrepublic.com/article/122887/poor-people-dont-have...

Not what I meant to come across as saying. Increased self control can help us all, and it can especially help poor people get out of debt and poverty.

EITC and tax credits. The poor are not just receiving a refund on withholdings.

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