When Working Harder Does Not Pay: Low-Income Working Families, Tax Liabilities, and Benefit Reductions
2007 ◽
Vol 88
(3)
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pp. 418-426
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Under some circumstances, recent reforms to policies that affect the working poor create a barrier to workers who try to increase their families' financial well-being through greater earnings. As earnings rise, benefits are reduced and taxes increase. Together these two factors may mean that accepting a raise or working more hours may not make a worker's family better off financially. This article presents an analysis of the extent of implicit taxation and describes how low-wage workers experience this phenomenon. We address three areas: how benefit programs and the tax system together create high combined tax rates, the implications of this system for low-income families' well-being, and finally, suggestions for practice and reform.
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2016 ◽
Vol 38
(18)
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pp. 2545-2566
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2011 ◽
Vol 11
(1)
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Keyword(s):
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