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FAMILY NEED DIFFERENCES AND FAMILY TAX BURDEN ESTIMATES

Family income adjusted by the welfare ratio method for the sizable differences which exist in family needs is receiving increasing attention as a measure of ability to pay taxes. In this paper tax burdens for all U.S. families ranked by a traditional income measure are compared with burdens for these families ranked by a welfare ratio measure. The magnitudes and types of differences in burden estimates which show up in the comparison and the reasons for these differences are examined. It is shown that these differences vary considerably among taxes and that overall they are sizable enough to influence tax policy and research.