Here are two stunning figures from the
liberal Urban Institute. If someone is facing anywhere near a 100% marginal tax rate, would they actually go out and work harder? There is in fact a wide range of income for this hypothetical family with two children where the effective marginal income tax rate is above 80% for the range of income from about $15,000 to over $40,000. The effect on people's incentives to escape poverty is obvious.
This last figure here does a good job of summarizing the point. If you go from earning the poverty level in Alabama to twice that level, a $17,000 increase in income, you effective spending power goes up by only $6,852 -- implying a 60 percent marginal tax rate.
Labels: book3, poverty
0 Comments:
Post a Comment
<< Home