The Journal, Poverty and Public Policy featured an article titled, “Progressive State Taxes and Welfare.” The goal of the study is to analyze how progressive tax systems are linked to the number of welfare recipients. There are differing views when it comes to income distribution. Classical fiscal federalism argues that income distribution should happen at the federal level. However, the states also have power in enforcing their own progressive tax systems which support social services, such as welfare. This produces varied tax redistribution based on their goals. The study answered two questions, “First, do progressive tax structures effectively redistribute income? Second, does a progressive tax system reduce the number of welfare caseloads in a state?”

The type of data used was aggregate, “the welfare recipients, state-specific information on Temporary Assistance for Needy Families programs (and Aid to Families with Dependent Children for years prior to 1997), multiple measures of tax progressivity, and demographic variables”– which were from 50 states from the years of 1990 to 2002. The study used two measures to determine state progressivity “the Revenue Distribution Index (RDI) measured by Bahl, Martinez- Vazquez, and Wallace (2002) and the Average Tax Rate Progressivity Index (ATR). “ The method of analysis was through regression equation which was described in the following tables. Table 1 described the demographic variables used, also variables as the control to measure the differences between states TANF programs and the Earned Income Tax Credit. Table 2 includes statistics of 1990 and 2002.

They concluded that there is a positive relationship between a state’s tax progressivity and the number of welfare recipients. These conclusions are significant because we can infer with confidence that a state’s tax policies has great effects. Such as “when a state collects a larger portion of its taxes through historically progressive tax policies, such as personal and corporate income taxes, rather than, for instance, sales taxes, the number of individuals enrolled in the TANF (formerly AFDC) program decreases.”

Smith, Kara D., and Bryan Shone. “Progressive State Taxes and Welfare.” Poverty & Public Policy 8, no. 4 (2016): 430-37. doi:10.1002/pop4.162.