US Federal Taxes & Welfare
|Include Employer Taxes|
The source code can be seen at taxes-2020.js.
What are these graphs?
The two graphs both represent the taxes and transfers hypothetical households making different incomes.
The first has two lines: white (black) and red. The white (black) line represents the effective tax rate. This is the percent of income the household has to pay.
The red line represents the marginal tax rate. If this were 30% and the household made one extra dollar, they'd have to pay an 30 extra cents in taxes.
The second graph only has one line. It represents the household's income after taxes and welfare.
What I Covered
In included federal income taxes (taking the standard deduction), the employee portion of FICA, and the earned income tax credit. I treat all income as earned labor income.
I included the employer portion of FICA, the 0.9% medicare tax, and the unemployment insurance tax.
I included the housing voucher program and SNAP. Including the housing voucher program is the most controversial choice I made since its lack of funding means that many people who are eligible don't get it. The zip code you choose is only used to determine the size of the housing voucher.
I did not include unemployment benefits or TANF because both have time limits. I did not include SSI because it is only available to the elderly, blind, and disabled.
Health care benefits are trickier for two reasons. First, the value of free health care varies a great deal between people and families. I also assumed $5000 for a single person plus $3000 for each additional household member.
The second bit of trickiness is that the "phase-out" rules are fairly complicated. The phase-out generally starts at 138% of the poverty line and continues to 400% of the poverty line and I assumed it was entirely linear.
I'm a bad person and didn't record all my sources. Here are the ones I remember:
- The Congressional Research Service's 2019 "The Earned Income Tax Credit (EITC): An Overview"
- The Department of Housing and Urban Development's fair market rents data for April of 2020
- The Departmnt of Labor's page on the unemployment insurance tax
- The Department of Agriculture's SNAP FAQ.
- The Depatment of Health & Human Service's poverty line table.
- HealthCare.gov's explanation of the Medicaid expansion.