Marginal Tax Rates Drives Lower Class Failures

More bad news for the middle and lower class - More suffering for the middle class, and the lower class, as these are the people that the progressives will use to gain more power, driving more unemployment with promises of longer time benefits , more food stamps, free phones, free child care, other social services that prohibit real life experiences as well as free citizenship for millions of illegal immigrants. This is the very voter base of the progressive socialist liberal Democrats.

And you must believe, the progresses socialists do not care what happens to these classes, they are about getting and keeping power no matter who will suffer. The working class individuals are just tools, nothing more.

Low-Income Workers Suffer High Effective Marginal Tax Rates
January 22, 2013
Source: Salim Furth, "Effective Marginal Tax Rates for Low-Income Workers Are High," Heritage Foundation, January 8, 2013.

A recent report by the Congressional Budget Office (CBO) reveals that effective marginal tax rates have unintended consequences for low-income workers, says Salim Furth, a senior policy analyst at the Heritage Foundation.

• A poverty trap created by benefits such as Section 8 housing and food stamps discourages low-income workers from earning more.
• Each additional dollar low-income workers earn between $5,000 and $20,000 brings only an additional $0.15 in disposable income, which amounts to a marginal tax rate of 85 percent.
• Low-income earners in the $10,000 to $23,000 range keep a smaller portion of their new earnings.

Policymakers need to think more carefully about the unintended consequences of the policies meant to aid low-income workers. For example, the argument supporting the minimum wage is weak because most increases in the minimum wage result in higher marginal tax rates and less income earned by the individual.

• A 10 percent rise in the minimum wage increases take-home pay by less than 4 percent according to the CBO.
• Lower minimum wages encourage free market competition and greater employment.
• The Affordable Care Act adds to low-income workers' tax burden by raising the marginal effective tax rate for a single parent earning between $22,000 and $62,000 a year by phasing out premium credits as wages rise.

Despite our best efforts, we may never truly measure poverty correctly until we fix the way we measure poverty statistics. The Official Poverty Measure in use today was developed in the 1960s and does not accurately reflect the realities facing the poor today.

• Furth also points out that the expiration of the temporary payroll tax cut will raise marginal tax rates another 2 percent for most wage earners.
• Many benefits are considered in-kind, or non-cash, the benefits of which are not calculated correctly according to the CBO report.

As tax reform continues to take center stage in public discussion, policymakers should keep in mind the income earners on the other end of the pay scale that struggle to make ends meet.