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Research report

Tax Burden on Poor Families Has Declined Over Time

Elaine Maag, Deborah Kobes
February 3, 2003
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Abstract

Families with children in poverty receive net subsidies from the federal income and payroll tax system, but that has not always been the case. In the 1970s, income tax filing thresholds were low, and even families in poverty who owed no income tax faced substantial payroll taxes. Congress enacted a refundable Earned Income Tax Credit (EITC) in 1975 to offset some payroll taxes for low-income workers. In 1986, 1990, 1993, and 2001, lawmakers greatly expanded the credit for families and moderately for childless workers. The combination of EITC changes, increases in exemptions and deductions, indexation of tax brackets, and expansion of the Child Tax Credit (CTC) has substantially improved the tax treatment of poor families with children.

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Federal Budget and Economy Individual Taxes
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Meet the Experts

  • Elaine Maag
    Principal Research Associate
  • Deborah Kobes
Brief

Understanding the Maze of Recent Child and Work Incentive Proposals

Elaine Maag, Nikhita Airi
June 1, 2020
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