Earnings income tax

Because of income-tax demands, the final net profit is often much less than the gross earnings. Income-tax rates are based on the gross earnings received from all the company interests. Consequently, the magnitude of these costs varies widely from one company to another. 

Net annual earnings = gross annual earnings - income taxes... 

In the mid-seventies an additional work-incentive measure was enacted the Earned Income Tax Credit (EITC).15 EITC became a permanent programme in 1978.16 EITC functions as a wage supplement. It makes low-wage work more attractive to unemployed individuals and benefit recipients, while at the same time benefiting employers by subsidising employment in low-wage jobs. 

There are two kinds of federal tax incentive programmes tax incentives for low wage workers to boost or supplement their available income, and tax incentives for employers who hire individuals with certain barriers to employment. The most well-known and largest programme is directed toward workers and called the Earned Income Tax Credit, regulated in 32 of the Internal Revenue Code (IRC) (26 USCA 32.). Nearly USD 31 billion was provided as EITC benefits in FY 2003.37... 

For low wage workers Federal Earned Income Tax Credit... 

The federal Earned Income Tax Credit (EITC) is a refundable tax credit.80 Under provisions for tax year 2006, single tax filers may qualify to receive a credit if they have earned incomes below annual levels of USD 12,120, 32,001, and 36,348 with zero, one, and more than one qualifying child respectively, and investment income of less than USD 2,800. These limits are called the break-even levels of earnings under the EITC. A summary of the parameters for the 2006 EITC is given for single filers in Table 41. The EITC is positive for earnings below the break-even level, and zero above the break even levels of earnings. 

States can use MOE funds to provide refundable State Earned Income Tax Programs (SEITC). The federal EITC and SEITCs have strong positive effects on labour supply (Moffitt 2002), employment, family income and independence from TANF. All active SEITCs depend on federal EITC eligibility rules and grant a percentage add-on to the federal EITC earned in the tax year. 

Needy households are entitled to receive food stamp allotments.112 The eligibility standards are prescribed in the Food Stamp Act of 1977. An eligible household s financial resources must not exceed USD 2,000 or, if the household consists of or includes an elderly person (an individual 60 years of age or older), resources must not exceed USD 3,000 (7 CFR 273.8 (b)). One car worth up to a fair market value of USD 4,650 and vehicles used to produce income or necessary for transportation of a physically disabled household member, as well as fuel for heating and water for home use are excluded from the financial resources.113 Significantly, this includes any earned income tax credits received by any member of the household for 12 months. In addition, a household s home is excluded (7 CFR 273.8 (e)(1)) from financial resources. The maximum allowable net income114 is the Federal Poverty Line (FPL).115 Households with no elderly persons must not have a gross... 

Meyer BD, Rosenbaum DT (2001) Welfare, the earned income tax credit, and the labor supply of single mothers. Quarterly Journal of Economics 116 1063-1114 Mittelstadt J (2005) From welfare to workfare The unintended consequences of liberal reform, 1945-1965. University of North Carolina Press, Chapel Hill, NC Moffitt RA (1981) The negative income tax Would it discourage work Monthly Labor Review 104(4) 23-27... 

We all pay tax on the money we earn (income tax). Tfie government uses tax to pay for services such as health, education, defence, social security and... 

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