Assume that Ava is a single parent who is in poverty. She receives food stamps and Medicaid. For every $100 that she earns, Ava loses $20 of her food stamp benefits and $15 in her Medicaid benefits. Ava's implicit marginal tax rate from these two programs is

Question

Quizplus · Accepted Answer

Ava's implicit marginal tax rate is the sum of the reduction in benefits as a percentage of her earnings. She loses $20 in food stamps and $15 in Medicaid for every $100 earned, totaling $35. Therefore, her implicit marginal tax rate is 35 percent.

Assume That Ava Is a Single Parent Who Is in Poverty