Petri, Tsongas propose national study on government treatment towards low-income families

Reps. Tom Petri (R-Wis.) and Niki Tsongas (D-Mass.) recently introduced a bill to establish a national commission to study how multiple federal and state benefit programs create disincentives for low-income families to work and can discourage marriage.

“When you look at the reality of our multiple benefit programs, there is a clear disincentive for low-income families to live the American Dream by getting married and working harder,” Petri said.

Low-income families are subject to reductions from many sources, including the federal income tax, payroll taxes and state income taxes. In addition, eligibility for many federal and state aid programs is based on income so as earnings rise the benefits phase out.

Petri said the effects of the reductions are similar to high marginal tax rates.

“The result is that as low-income individuals get a raise or put in extra hours, they are seeing less and less of their additional earnings in their take-home pay,” Petri said. “And, low-income couples that marry face an immediate loss of disposable income.”

The proposed bill, the Making Work and Marriage Pay Act, would authorize a commission made up of cabinet secretaries, governors and recognized policy experts to recommend solutions for increasing coordination in the design of benefits for low-income families in order to reduce effective marginal tax rates and decrease disincentives to work and marry.

The proposed bill would also require the commission to consider a policy that combines non-tax benefits into a single voucher and combines federal tax credits into a coordinated credit that minimizes phase-outs, encourages work and does not penalize marriage.

In addition, it would establish a single eligibility standard for all federal benefit programs.