Volume 20, Number 2 (Spring) 1985
Fraker, Thomas, Robert Moffitt, and Douglas Wolf. 1985. "Effective Tax Rates and Guarantees in the AFDC Program, 1967-1982." Journal of Human Resources 20(2):251-263.
Estimates of effective tax rates on earned and unearned income and estimates of effective guarantees in the AFDC program by state are provided for the period 1967-1982. The results indicate that effective real guarantees fell every year from 1967 to 1981 but stabilized in 1982. Effective tax rates on unearned income rose steadily from 1967 to 1981 and took a particularly large additional jump in 1982. Effective tax rates on earned income fell after 1967, but then gradually rose throughout the 1970s until 1982, when they took a much larger jump. Thus, guarantees fell and tax rates rose over the 1970s as tight budgets forced states to restrict benefits, and in the early 1980s tax rates were pushed even higher by federal legislation.
Fraker is an Economist with Mathematica Po/icy Research. Moffitt is
Professor of Economics. Brown University, and is a/so associated with
Mathematica Po/icy Research. Wolf is an Economist with the Urban Institute.
The authors would like to thank the Department of Health and
Human Services, the Food and Nutrition Service of the Department of Agriculture,
the Urban Institute, and the Institute for Research on Poverty for supporting
components of this research. Thanks for research assistance also go to Linda
Jefferson and Eric Hirsch at the Urban Institute, Jon Bernhardt at Mathematica
Policy Research, and Steven Berry and Douglas Wissoker at the University of
Wisconsin. All errors and opinions are those of the authors.
© 2003 by the Board of Regents of the University of Wisconsin System
US ISSN 0022-166X