Key takeaways
- The Niskanen Center’s second annual Family Benefits Report Card examines how American families benefit from two distinct sets of social policies: traditional social assistance programs, including Temporary Assistance for Needy Families (TANF) and the Supplemental Nutrition Assistance Program (SNAP); and refundable tax credits, including Earned Income Tax Credits (EITC) and Child Tax Credits (CTC).
- Federal and state policymakers, however, often navigate between maximizing the anti-poverty and pro-work effects of a family benefit without a full picture of how benefits interact with one another. The results can be precisely opposite of the aims — policies intended to create economic opportunity for those at the bottom of the ladder unwittingly penalize upward mobility.
- For 2024, we evaluated total benefits and implicit marginal tax rates that families with young children face when their earnings increase. Our analysis focuses on 11 states: California, Colorado, Maine, Maryland, Massachusetts, Minnesota, New Jersey, New Mexico, New York, Oregon, and Vermont.
- For families with no earnings, total benefits from social assistance and refundable tax credits ranged from $12,362 in New Mexico to $19,394 in California for a single parent with one child, and $20,980 to $30,782 for married parents with two children. These incomes put them between about 60 percent and just short of the federal poverty threshold in 2024.
- Families face higher implicit marginal tax rates when they move from a minimum- to a median-wage job than when they transition from welfare to a minimum-wage job, affirming recent research indicating that we have moved from a poverty trap to a just-above-poverty trap.