3 ms·
The article explains that the difference is mostly due to tax changes (hence the "After Taxes" qualifier in the title): This dramatic difference can be attribu
by philipkglass 3y ago
The article explains that the difference is mostly due to tax changes (hence the "After Taxes" qualifier in the title):
This dramatic difference can be attributed to key changes in federal tax policy.
In 2022, several policies enacted by the American Rescue Plan Act (ARPA) expired, including an expansion of the Earned Income Tax Credit (EITC) for filers without children and full refundability of the Child Tax Credit (CTC) and Child and Dependent Care Tax Credit (CDCTC). ARPA also increased the maximum amount of CTC.
In 2020 and 2021, most households also received Economic Impact Payments (EIP) that were no longer issued in 2022.
The rollback of these tax policies had the largest effect on post-tax income among the nation’s lowest-income households.
In 2021, for example, post-tax income at the 10th percentile, meaning at the bottom of the income distribution, was 17.1% higher than the corresponding pretax income estimate, reflecting the substantial boost that lower-income households received that year from the EIP and expanded CTC.
In contrast, the 2022 estimates of pretax and post-tax income at the 10th percentile were not significantly different (Figure 1).