But an innovative study of Wisconsin households that merges data from tax returns and state administrative data shows that some low-income families faced a combined state and federal marginal tax rate of 44 percent in 2000. Some fell off a cliff when they earned just enough income to disqualify them from the state’s public health insurance program.Marginal tax rates; what is the tax on the next dollar earned, is 44%! I will follow up on this study because I see it around here all the time. Young people want jobs that either provide some spending cash, and no more; or they want to jump up above the dead zone in wages.
The Dead Zone is a problem that technology can solve, basically by automating most jobs up to and including the Dead Zone. One of the biggest costs in transportation is the Dead Zone for drivers wages, it is such an unpopular wage setting that labor supply is minimal. Truck drivers sit right in the middle of the dead zone. But retail clerks sit just below it.
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For example, families using food stamps, public health coverage, and child care subsidies would see little increase in discretionary income between earnings of $10,000 per year and $30,000 if they attempted to replace the value of those lost benefits.What has gone wrong? The economy does not have the precision to assign differing values along that income range. the economy cannot distinguish from a wage of $10,000 and $30,000. Automationwill collapse those wage settings and bring balance back.
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