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Publications by Topic
Topic: Marriage Penalties and Taxation of the Family
Considerations in Efforts to Restructure Work-Based Credits (Research Report)
Author(s):
Steve Holt , Elaine Maag
The Internal Revenue Code has replaced traditional means-tested programs as the principal means for transferring income to low earners. The largest vehicle is the Earned Income Tax Credit (EITC), now supplemented by both the Child Tax Credit (CTC) and the Making Work Pay tax credit (MWP).
This paper looks at the system's evolution, the important role played by the tax system in assisting low earners, and the complexities presented by the current approach. It offers principles to guide the design of a worker credit and child benefit that would replace the EITC, CTC, and MWP, along with a specific proposal.
Published: 11/09/09
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The Opacity of Marginal Tax Rates (Article/Tax Facts)
Author(s):
Rosanne Altshuler , Jacob Goldin
Suppose that a taxpayer earns an additional dollar of
income. How much tax would she owe on that dollar? A
natural way to answer this question would be to look up
the taxpayer’s statutory tax rate - the tax rate corresponding
to her tax bracket and filing status.
Published: 10/21/09
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Credits and Exemptions for Children (Article/Tax Facts)
Author(s):
Elaine Maag
The Earned Income Tax Credit, Child Tax Credit (CTC), Additional Child Tax Credit (ACTC), and the dependent exemption all provide benefits to families
with children. In 2009, a single mom (or dad) with two children can receive benefits ranging from $0 to about $7,500 - depending on her income, age of the children,
and where the children live. While this assistance is extremely important to many low-income families, they
must navigate a bewildering set of rules to take full advantage of the credits. Due to the piecewise implementation of these credits and exemptions, total benefits bounce around erratically as income grows.
Published: 10/14/09
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The Next Stage for Social Policy: : Encouraging Work and Family Formation among Low-Income Men (Discussion Papers/Tax Policy Center)
Author(s):
Adam Carasso , Harry Holzer , Elaine Maag , C. Eugene Steuerle
The Earned Income Tax Credit enjoyed marked success bringing low-income women into the labor force in recent years. At the same time, labor force participation by low-income or less-education men stagnated, and declined among young black men. In response to these labor market conditions, this paper analyzes several EITC reform options directed at increasing the EITC for low-income workers, in the hopes of drawing these men into the labor force. We estimate the cost of various proposals and put forth an additional proposal that breaks the EITC into two components – one focused on individual workers and one focused on supporting children.
Published: 10/22/08
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Effective Tax Rates for Different Kinds of Households (Article/Tax Facts)
Author(s):
Roberton Williams
One measure of the tax burden imposed on households is their effective tax rate (ETR)—the total taxes they pay measured as a percentage of their pretax income. ETRs vary across types of households because of differences in sources and levels of income and in how the tax system treats taxpayers in different situations. Each year the Congressional Budget Office estimates ETRs for individual and corporate income taxes, payroll taxes, and excise taxes for different types of households, as well as all households as a group.
Published: 01/14/08
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Distributional Effects of the Major Individual Income Tax Provisions of H.R. 3970 (Research Report)
Author(s):
Greg Leiserson , Jeff Rohaly
On October 25, 2007, Ways and Means Committee Chairman Charles Rangel (D-NY) unveiled H.R. 3970, The Tax Reduction and Reform Act of 2007, sweeping tax reform legislation that would provide for a revenue-neutral repeal of the individual alternative minimum tax (AMT). This paper describes the proposal and provides distribution tables that analyze the impact of the major individual income tax provisions in the bill.
Published: 10/26/07
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Reforming the Child and Dependent Care Tax Credit (Research Report)
Author(s):
Jeff Rohaly
The child and dependent care tax credit (CDCTC) is a nonrefundable tax credit designed to help offset the expenses of providing care for children under the age of 13 or disabled dependents as long as a parent or caretaker is working or searching for work. In theory, a low-income family can qualify for a maximum $2,100 credit. The credit is not refundable, however, and families with low incomes generally owe little or no income tax. Thus, the theoretical maximum rarely applies in practice. This paper examines the revenue and distributional implications of making the CDCTC fully refundable.
Published: 06/11/07
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Income Taxes and Tax Rates for Sample Families, 2006 (Research Report)
Author(s):
Greg Leiserson
This article examines variations in tax liability and tax rates confronting typical families as income and the number of children change for tax year 2006. Although the examples represent very simple tax situations, they illustrate how hidden taxes and subsidies can make the marginal tax rate an amalgam of different effects. Often, the effective marginal tax rates and average tax rates can vary significantly from the statutory tax rates because of the phase-ins and phase-outs of deductions and credits, the individual alternative minimum tax, progressive tax schedules, and other aspects of our income tax system.
Published: 01/02/07
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The True Tax Rates Confronting Families With Children (Article/Tax Facts)
Author(s):
C. Eugene Steuerle , Adam Carasso
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.
Published: 10/10/05
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