Peter Orszag writes at Bloomberg View:
A low-income single parent can experience a marginal rate as high as 95 percent -- for each dollar earned, the person takes home only 5 cents. And for married parents, the marginal rate for the family's secondary earner can be almost as high.
This happens mostly because various means-tested benefit programs are phased out as income increases. ...If we care about encouraging work incentives, these high marginal tax rates for low-income families deserve as much, if not more, attention than the rates for the biggest earners.
Kudos to Mr. Orszag for calling attention to this problem. I'm not sure I agree with the wisdom of his proposed solution, a tax deduction "for secondary earners." That would further complicate an already too-complicated tax code. And Mr. Orszag somehow manages to avoid mentioning that, as President Obama's director of the Office of Management and Budget, he was a major public pitchman for adding a new means-tested benefit program that makes this benefit phaseout/work incentive problem even worse — ObamaCare.
