scholarly journals Trends in Cumulative Marginal Tax Rates Facing Low-Income Families, 1997-2007

2016 ◽  
Author(s):  
Gizem Kosar ◽  
Robert Moffitt
Keyword(s):  
Low Income ◽  
Tax Rates ◽  
Marginal Tax Rates ◽  
Low Income Families

scholarly journals The Case for a Progressive Tax: From Basic Research to Policy Recommendation

2011 ◽  
Vol 25 (4) ◽  
pp. 165-190 ◽  
Author(s):  
Peter Diamond ◽  
Emmanuel Saez
Keyword(s):  
Low Income ◽  
Academic Research ◽  
Basic Research ◽  
Policy Recommendations ◽  
Tax Rates ◽  
Capital Income ◽  
Marginal Tax Rate ◽  
Tax Rate ◽  
Marginal Tax Rates ◽  
Low Income Families

This paper presents the case for tax progressivity based on recent results in optimal tax theory. We consider the optimal progressivity of earnings taxation and whether capital income should be taxed. We critically discuss the academic research on these topics and when and how the results can be used for policy recommendations. We argue that a result from basic research is relevant for policy only if 1) it is based on economic mechanisms that are empirically relevant and first order to the problem, 2) it is reasonably robust to changes in the modeling assumptions, and 3) the policy prescription is implementable (i.e, is socially acceptable and not too complex). We obtain three policy recommendations from basic research that satisfy these criteria reasonably well. First, very high earners should be subject to high and rising marginal tax rates on earnings. Second, low-income families should be encouraged to work with earnings subsidies, which should then be phased-out with high implicit marginal tax rates. Third, capital income should be taxed. We explain why the famous zero marginal tax rate result for the top earner in the Mirrlees model and the zero capital income tax rate results of Chamley and Judd, and Atkinson and Stiglitz are not policy relevant in our view.

scholarly journals Efficient Child Care Subsidies

2020 ◽  
Vol 110 (1) ◽  
pp. 162-199 ◽  
Author(s):  
Christine Ho ◽  
Nicola Pavoni
Keyword(s):  
Child Care ◽  
Low Income ◽  
The United States ◽  
Tax Rates ◽  
Child Care Subsidies ◽  
Optimal Program ◽  
The Us ◽  
Marginal Tax Rates ◽  
Welfare Problem ◽  
Care Costs

We study the design of child care subsidies in an optimal welfare problem with heterogeneous private market productivities. The optimal subsidy schedule is qualitatively similar to the existing US scheme. Efficiency mandates a subsidy on formal child care costs, with higher subsidies paid to lower income earners and a kink as a function of child care expenditure. Marginal labor income tax rates are set lower than the labor wedges, with the potential to generate negative marginal tax rates. We calibrate our simple model to features of the US labor market and focus on single mothers with children aged below 6. The optimal program provides stronger participation but milder intensive margin incentives for low-income earners with subsidy rates starting very high and decreasing with income more steeply than those in the United States. (JEL D82, H21, H24, J13, J16, J32)

scholarly journals Effective Marginal Tax Rates for Working for Families Recipients

1970 ◽  
Author(s):  
Phillip Spier
Keyword(s):  
Low Income ◽  
Tax Credits ◽  
Direct Result ◽  
Tax Rates ◽  
Work Incentives ◽  
Policy Changes ◽  
Marginal Tax Rates ◽  
Hours Of Work

This paper examines how the Working for Families (WFF) package changed work incentives for WFF recipient families. While not being able to examine work incentives directly, we were able to measure changes in effective marginal tax rates (EMTRs) for WFF recipients. The lower the EMTR a person faces, the more financially profitable it is for them to increase their hours of work or earnings. Conversely, a high EMTR over a range of earnings can be a disincentive for a person to work more. Beneficiary families and the vast majority of low income non­beneficiary families in receipt of WFF had lower EMTRs as a result of the policy changes. The April 2006 changes to the WFF package decreased EMTRs for middle­to­high income families already in receipt of WFF Tax Credits, but increased EMTRs for families who became newly eligible for this component as a direct result of the changes.

When Working Harder Does Not Pay: Low-Income Working Families, Tax Liabilities, and Benefit Reductions

2007 ◽  
Vol 88 (3) ◽  
pp. 418-426 ◽  
Author(s):  
Jennifer L. Romich ◽  
Jennifer Simmelink ◽  
Stephen D. Holt
Keyword(s):  
Low Income ◽  
Well Being ◽  
Working Poor ◽  
Tax Rates ◽  
Tax System ◽  
Two Factors ◽  
Working Families ◽  
Low Income Families ◽  
Implicit Taxation

Under some circumstances, recent reforms to policies that affect the working poor create a barrier to workers who try to increase their families' financial well-being through greater earnings. As earnings rise, benefits are reduced and taxes increase. Together these two factors may mean that accepting a raise or working more hours may not make a worker's family better off financially. This article presents an analysis of the extent of implicit taxation and describes how low-wage workers experience this phenomenon. We address three areas: how benefit programs and the tax system together create high combined tax rates, the implications of this system for low-income families' well-being, and finally, suggestions for practice and reform.

Demonstrating Nutrient Cost Gradients: A Brooklyn Case Study

2014 ◽  
Vol 84 (5-6) ◽  
pp. 244-251 ◽  
Author(s):  
Robert J. Karp ◽  
Gary Wong ◽  
Marguerite Orsi
Keyword(s):  
Low Income ◽  
Energy Content ◽  
Food Selection ◽  
The United States ◽  
United States Department ◽  
Micronutrient Deficiencies ◽  
Caloric Density ◽  
Low Income Families ◽  
The Cost ◽  
The Impact

Abstract. Introduction: Foods dense in micronutrients are generally more expensive than those with higher energy content. These cost-differentials may put low-income families at risk of diminished micronutrient intake. Objectives: We sought to determine differences in the cost for iron, folate, and choline in foods available for purchase in a low-income community when assessed for energy content and serving size. Methods: Sixty-nine foods listed in the menu plans provided by the United States Department of Agriculture (USDA) for low-income families were considered, in 10 domains. The cost and micronutrient content for-energy and per-serving of these foods were determined for the three micronutrients. Exact Kruskal-Wallis tests were used for comparisons of energy costs; Spearman rho tests for comparisons of micronutrient content. Ninety families were interviewed in a pediatric clinic to assess the impact of food cost on food selection. Results: Significant differences between domains were shown for energy density with both cost-for-energy (p < 0.001) and cost-per-serving (p < 0.05) comparisons. All three micronutrient contents were significantly correlated with cost-for-energy (p < 0.01). Both iron and choline contents were significantly correlated with cost-per-serving (p < 0.05). Of the 90 families, 38 (42 %) worried about food costs; 40 (44 %) had chosen foods of high caloric density in response to that fear, and 29 of 40 families experiencing both worry and making such food selection. Conclusion: Adjustments to USDA meal plans using cost-for-energy analysis showed differentials for both energy and micronutrients. These differentials were reduced using cost-per-serving analysis, but were not eliminated. A substantial proportion of low-income families are vulnerable to micronutrient deficiencies.

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