Research Report The True Tax Rates Confronting Families With Children
Adam Carasso, C. Eugene Steuerle
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The panoply of U.S. tax and transfer programs often act in concert to penalize low-income families who increase their work effort or marry, by saddling them with high effective marginal tax rates. These effective marginal tax rates-often the product of multiple, hidden phase-outs in benefit programs like the EITC, Food Stamps, and Medicaid-are often higher for low-to-middle income families with children earning between $10,000 and $40,000 than they are for more well-to-do families earning above, $90,000. Rates can be so high that families lose nearly a dollar in program benefits for every additional dollar of earnings income they bring in.
Research Areas Economic mobility and inequality Taxes and budgets
Tags Individual taxes Federal budget and economy Income and wealth distribution