tax burdens

Brad De Long delong at econ.Berkeley.EDU
Fri Oct 23 06:42:03 PDT 1998



>In a message dated 98-10-22 14:03:00 EDT, you write:
>
><< While the marginal effects may seem interesting
> for economists - NOT ONE
> >ECONOMIST would ever want to have to be subjected
> to the EITC. >>
>
>I must have come in late. The what?

The Earned Income Tax Credit--one of the progressive parts left in our tax system. If you have two kids, the IRS pays *you* about 40 cents on the dollar for the first $8,000 your household makes: when a household making $8,000 a year files its income tax return, the IRS pays *them* about $3,000.

The credit is then gradually taken away as incomes rise further. I don't think that the credit disappears completely until you hit household incomes of $28,000 or so. Every household making less than that has its taxes reduced because of this program...

Brad DeLong



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