TANF Recipients' Implicit Tax Rates from Earnings Disregard Policies

Research Report

TANF Recipients' Implicit Tax Rates from Earnings Disregard Policies

December 21, 2011

Abstract

An important dimension of AFDC/TANF programs is the disincentives to work recipients face due to the reduction in benefits that comes with an increase in earnings. These disincentives can be represented as average (implicit) tax rates that depend directly on policy variables including the maximum benefit and the disregard policy in states. To help those interested in better understanding these implicit tax rates, we have provided a dataset of relevant summary variables including the maximum benefit, the effective tax rate on the first $500 of earnings (in 2010 dollars), the effective tax rate on a part-time full-month minimum wage job, and how these measures vary across families of different sizes for each state in each year from 1996 to 2010. The dataset and accompanying tables were derived from the Urban Institute's Welfare Rules Database, and are available as a PDF file (with documentation/discussion) or as an Excel file and Stata dataset.

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