Tuesday, December 09, 2008

The Welfare Tax

Graduate student Fatima Carson and I will be publishing a short op-ed discussing the above table in the Indiana Business Journal (hyperlink forthcoming). It tells a familiar story, that the welfare safety net can be a captivity net. Notice that, due to the cut in transfer benefits, earning income over the $12K-$20K range only increases disposable income by less than $5K. That is quite a tax on gaining experience.

West Virginia, however, is much worse (See Figure 11.5 on page 8 of this pdf).

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