There has been some effort to get rid of dead zones by changing thresholds into phase-out zones, but not everything's been changed, and some programs probably need more gradual phase-outs, especially if you consider their impact when taken together. There's an issue though that gradual phase-outs are hard to structure in a way that's politically popular: most people seem to have a mental phase-out that's fairly steep, so it's popular to give food stamps to a family of 4 making, say, $18k, but unpopular to give food stamps to a family of 4 making, say, $30k. But if you phase them out from 100% to 0% within a $12k range, you produce a significant implied tax over that range. Either the phase-out has to start so low that genuinely poor people get <100%, or it has to go up high enough that people who no longer really qualify as poor get some low but non-zero amount.
Re:Marginal income tax rates for a single California residen...
by _delirium on Wednesday May 12, 2010 @10:37PM
(#1343085)
Part of the difference is also that he's looking at single people, while your linked graph is for a family of three, and there are much more generous grants/transfers for families.
http://4.bp.blogspot.com/_djgssszshgM/SvtscpywvOI/AAAAAAAABD...
There actually is a dead zone. Which is horrible.