A useful way to examine how these combined interactions with government play out
is through a calculation of the “effective marginal tax rates” for various families in a
way that combines both the direct tax and indirect benefi t reduction rates. That tax rate
equals the net amount of additional resources taken away (the rate may be negative if
more is received than taken away) through tax and benefi t changes as a percentage of
the increase in earnings. High effective marginal tax rates, particularly among low- and
middle-income families with children, have been noted by many researchers.