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Improving Efficiency and Equity of Child-Related Federal Tax Policies

Author

Listed:
  • Robert Cherry

    () (Department of Economics, Brooklyn College of The City of New York)

Abstract

Proposal combines EITC, child credit, and dependent allowance into one child-related benefit program so that the tax code is simplified. It allows the phasing down of benefits to be less than 6 percent so that the marginal tax rate is reduced, especially for families that are currently subject to both the federal tax rate and the EITC phase-out rate. It reduces the marriage penalty for single heads with incomes below $20,000. It eliminates the middle class parent penalty: the current situation in which families with incomes between $30,000 and $60,000 receive less child-related benefits than either wealthier or poorer households. Finally, though it only costs modestly more than the Bush child credit proposal, it is more effective at lowering marginal tax rates and marriage penalties.

Suggested Citation

  • Robert Cherry, 2001. "Improving Efficiency and Equity of Child-Related Federal Tax Policies," Eastern Economic Journal, Eastern Economic Association, vol. 27(3), pages 309-322, Summer.
  • Handle: RePEc:eej:eeconj:v:27:y:2001:i:3:p:309-322
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    File URL: http://web.holycross.edu/RePEc/eej/Archive/eeconj/Volume27/V27N3P309_322.pdf
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    More about this item

    Keywords

    Child; Families; Marriage; Tax;

    JEL classification:

    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth
    • J12 - Labor and Demographic Economics - - Demographic Economics - - - Marriage; Marital Dissolution; Family Structure

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