Federal and State Income Taxes and Their Role in the Social Safety Net

Research Report

Federal and State Income Taxes and Their Role in the Social Safety Net

July 23, 2015

Abstract

Federal and state income taxes play an important role in providing income support for low-income households by administering refundable tax credits, such as the earned income tax credit (EITC). Using the Urban Institute’s Net Income Change Calculator (NICC), which provides state- and federal-level information on tax and transfer programs in 2008, I calculate the value of TANF and SNAP as well as state and federal income taxes for a single parent working full-time at the minimum wage with two children. In many cases, state and federal tax credits exceed the value of the more traditional safety net programs.

Cross-Center Initiative

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