Results of Tax Incidence Analysis

Figure 8-1, "Effective tax rates, selected income, and payroll taxes," graphically represents four groups of taxes and their impact on wages to a married couple with one child, earning from $1,000 per year to $100,000. Figure 8-2, "Total tax rates on wage income," illustrates the effect of income and payroll taxes on workers with different earnings, both before and after the application of an EITC. You will note that, consistent with the goals of the program, the credit offsets much or all of the payroll tax burdens on low-income workers.

FIGURE 8-2 Total tax rates on wage income.
FIGURE 8-3 Fiscal estimation model.
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