Using NICC, we can calculate effective marginal tax rates for this type of single parent
family in each state, assuming earnings in only the last six months of the year (Table 4).
Here, we find effective marginal tax rates for a single parent with two children moving
from no earnings to half-poverty earnings range from a low of –28.8 percent in Alabama
to a high of 11.6 percent in Hawaii, excluding health care. Moving from half-poverty
to poverty, our sample family’s effective marginal tax rate ranges from –21.5 percent
to 54.4 percent. Under the previous set of assumptions, the high effective marginal
tax rate was 61.3 percent. Families moving from poverty level earnings to earnings at
150 percent of poverty who have earnings in only the second half of the year will face
effective marginal tax rates ranging from –17.0 percent to 66.0 percent and families
moving from earnings at 150 percent of poverty to earnings at twice poverty will face
an effective marginal tax rate ranging from 41.5 percent to 55.2 percent. In general,
we find, as expected, lower effective marginal tax rates when people have all of their
earnings in only half of the year.
Using NICC, we can calculate effective marginal tax rates for this type of single parentfamily in each state, assuming earnings in only the last six months of the year (Table 4).Here, we find effective marginal tax rates for a single parent with two children movingfrom no earnings to half-poverty earnings range from a low of –28.8 percent in Alabamato a high of 11.6 percent in Hawaii, excluding health care. Moving from half-povertyto poverty, our sample family’s effective marginal tax rate ranges from –21.5 percentto 54.4 percent. Under the previous set of assumptions, the high effective marginaltax rate was 61.3 percent. Families moving from poverty level earnings to earnings at150 percent of poverty who have earnings in only the second half of the year will faceeffective marginal tax rates ranging from –17.0 percent to 66.0 percent and familiesmoving from earnings at 150 percent of poverty to earnings at twice poverty will facean effective marginal tax rate ranging from 41.5 percent to 55.2 percent. In general,we find, as expected, lower effective marginal tax rates when people have all of theirearnings in only half of the year.
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