RT Journal Article
SR Electronic
T1 Making Work Pay
JF Journal of Human Resources
JO J Hum Resour
FD University of Wisconsin Press
SP 619
OP 642
DO 10.3368/jhr.XLII.3.619
VO XLII
IS 3
A1 James P. Ziliak
YR 2007
UL http://jhr.uwpress.org/content/XLII/3/619.abstract
AB In the 1990s, many states liberalized statutory rules regarding the tax treatment of earned and unearned income for welfare program eligibility and benefit levels. I use quality control data from the AFDC/TANF program over 1983–2002 to document changes in the corresponding effective tax rates and benefit guarantees. After welfare reform I find that effective tax rates fell by 50 percent on earned income and by at least 70 percent on unearned income. States that aggressively reformed their welfare programs, especially those that implemented a stringent sanctions policy on benefits, experienced more rapid reductions in effective tax rates and guarantees.