Marginal Tax Rates Create Low Reward Zones for Low Income Workers
Created on January 7, 2013
MARGINAL TAX RATE FOR SINGLE PARENT WITH ONE CHILD IN 2012
Low-income earners looking to work their way out of poverty may face a stretch—a “low-reward” zone—in which they can keep only a small share of their new earnings. As shown in the scenario below, a single parent earning $10,000 to $23,000 would pay marginal tax rates from 66 percent to 95 percent.
Note: Figures include transfer programs.
Source: Congressional Budget Office, Effective Marginal Tax Rates for Low- and Moderate-Income Workers, November 2012, http://www.cbo.gov/sites/default/files/cbofiles/attachments/11-15-2012-MarginalTaxRates.pdf (accessed January 7, 2013).