Taxing the Poor into Staying Poor

A new NBER study reveals the that “One in four low-wage workers face lifetime marginal net tax rates above 70 percent, effectively locking them into poverty.” 
By earning an extra $1,000, “one in four of our poorest households, regardless of age, make between two and three times as much for the government than they make for themselves.”

Social Security, for example, “has 2,728 primary rules governing the receipt of its 12 benefits, plus tens of thousands of secondary rules.” A person who earns an extra buck, they continue, might lose 22 cents from the earned-income tax credit, or forfeit thousands in Medicaid benefits, or face almost $800 in higher Medicare premiums, “and the list goes on.”