Estimating Implicit Marginal Tax Rates of Welfare Recipients across the US States

J. Sebastian Leguizamon

Public Finance Review, 2012, vol. 40, issue 3, 401-430

Abstract: This article provides a more accurate estimate of implicit marginal tax rates (IMTRs) faced by low-income households in all fifty states. Complications arising from multiple program participation, regional differences in wage regulations, and cost of living make former generalizations about representative low-income households in a state potentially problematic. Additionally, it is appropriate to account for differences in work requirements by choosing the relevant margin to estimate the IMTR, and these margins vary by state. This article is the first to consider these margins, and, indeed, the author finds significant variation of IMTRs for different states. One of biggest sources of variation is the structure of child care subsidies provisions and cost. However, changes made to initial assumptions causes the estimated rates to vary in unpredictable ways. Given this complicated and unpredictable nature of the variation, researchers should exercise caution when using estimated IMTRs to examine work incentives of welfare programs.

Keywords: marginal tax rates; welfare; low-income households (search for similar items in EconPapers)
Date: 2012
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://journals.sagepub.com/doi/10.1177/1091142111432447 (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:sae:pubfin:v:40:y:2012:i:3:p:401-430

DOI: 10.1177/1091142111432447

Access Statistics for this article

More articles in Public Finance Review
Bibliographic data for series maintained by SAGE Publications ().