Brief Analyzing Recent State Tax Policy Choices Affecting Low-Income Working Families
The Recession and Beyond
Elaine Maag
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Owing to balanced budget requirements, states often raise taxes during recessions. Unless carefully crafted, these tax hikes can fall on low-income working families--the same families likely to be subject to concurrent budget cuts. During the recession that started in 2001, states utilized several tools to balance budgets including tapping rainy day funds, borrowing, increasing taxes, and cutting spending. In many cases, low-income families were shielded from tax increases by increasing or creating state Earned Income Tax Credits (EITCs). This policy brief details state tax changes affecting low-income families between 2002 and 2006.
Research Areas Families Social safety net Taxes and budgets
Tags Low-Income Home Energy Assistance Program (LIHEAP) Economic well-being State programs, budgets State and local tax issues Individual taxes Federal budget and economy