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Research report

How Marginal Tax Rates Affect Families at Various Levels of Poverty

Elaine Maag, C. Eugene Steuerle, Caleb Quakenbush, Ritadhi Chakravarti
December 19, 2012
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Abstract

High marginal tax rates can make moving above poverty very difficult for low-income families. These high tax rates result from increasing direct taxes and decreasing transfer payments. A single parent with two children who increases her wages from poverty-level to 150 percent of poverty-level can face a tax rate between 26.6 percent and over 100 percent, depending on which state she lives in. In addition, her marginal tax rate can vary radically, depending on her earning pattern. This paper shows how sensitive marginal tax rates are to assumptions about state of residence, earning patterns, and program participation.

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Federal Budget and Economy Individual Taxes Tax rates
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Meet the Experts

  • Elaine Maag
    Senior Fellow, Research
  • C. Eugene Steuerle
    Institute Fellow and Richard B. Fisher Chair
  • Caleb Quakenbush
    Research Associate I
  • Ritadhi Chakravarti
Research report

New Evidence on The Effect of The TCJA On the Housing Market

Robert McClelland, Livia Mucciolo, Safia Sayed
March 30, 2022
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