Families receiving social welfare benefits and tax credits can face implicit marginal tax rates on earnings above 60 percent, especially when they participate in multiple programs. Program designs may penalize work and marriage and create complexity for beneficiaries and program managers. In...
People may purchase subsidized health insurance through the ACA exchanges with premiums based on projected future income. However, if actual income is higher than estimated, they may be required to repay part or all of the subsidy when they file tax returns. This “reconciliation” process could...
This paper reviews historical trends in economic inequality and tax policys role in reducing it. It documents the various reasons why income inequality continues to rise, paying particular attention to the interplay between regressive and progressive federal and state taxes. The report also...
In 1975, the federal income tax code joined the "War on Poverty" with the enactment of the earned income tax credit (EITC). Today, tax credits form some of the largest and most effective anti-poverty programs in the US. In 2012, the Census Bureau estimated that tax credits cut poverty (under a...
The benefits of itemized deductions for mortgage interest and property taxes vary by income and demographic characteristics. The two deductions increase after-tax income most for high-income families, particularly those with children, while low-income households hardly benefit at all. On average...
Policymakers should be thinking hard about low-income families with children and the tax code. In 2010, the federal income tax system will deliver substantial assistance to these families through refundable tax credits. The Tax Policy Center estimates a third fewer children would be in poverty...
Marginal Tax Rates and 21st Century Social Welfare Reform
Families receiving social welfare benefits and tax credits can face implicit marginal tax rates on earnings above 60 percent, especially when they participate in multiple programs. Program designs may penalize work and marriage and create complexity for beneficiaries and program managers. In...
Tax Refunds and Affordable Care Act Reconciliation
People may purchase subsidized health insurance through the ACA exchanges with premiums based on projected future income. However, if actual income is higher than estimated, they may be required to repay part or all of the subsidy when they file tax returns. This “reconciliation” process could...
Taxes and Inequality
This paper reviews historical trends in economic inequality and tax policys role in reducing it. It documents the various reasons why income inequality continues to rise, paying particular attention to the interplay between regressive and progressive federal and state taxes. The report also...
The War on Poverty Moves to the Tax Code
In 1975, the federal income tax code joined the "War on Poverty" with the enactment of the earned income tax credit (EITC). Today, tax credits form some of the largest and most effective anti-poverty programs in the US. In 2012, the Census Bureau estimated that tax credits cut poverty (under a...
The Benefits of the Mortgage Interest and Property Tax Deductions
The benefits of itemized deductions for mortgage interest and property taxes vary by income and demographic characteristics. The two deductions increase after-tax income most for high-income families, particularly those with children, while low-income households hardly benefit at all. On average...
Extending Tax Credits for Low-Income Families
Policymakers should be thinking hard about low-income families with children and the tax code. In 2010, the federal income tax system will deliver substantial assistance to these families through refundable tax credits. The Tax Policy Center estimates a third fewer children would be in poverty...