Chart of the Week: Do Government Programs Encourage Poverty?

If you're a single parent in Virginia, you're probably going to take home a little less than $40,000 per year. But oddly, due to various tax breaks and welfare benefits, your haul will be roughly the same, regardless of whether you've made $20,000 or $40,000 from actually working.

That's according to an analysis of the "working poors'" implicit marginal tax rate from the Mises Institute, a libertarian think tank. The chart below has been popping up on other economics blogs this week, so I figured readers on BNET would be interested to see it as well.

This chart's creator, Clifford F. Thies, is convinced slicing welfare/income data in other ways would still show the same result: for many, there is a disincentive to work for more money.
Here a few of the consequences of such government hand-out programs, in Thies' view, even if they are well-intentioned:

For many of the working poor, the implicit marginal tax rate is greater than 100 percent. The long-run consequence of undermining the positive incentive to work is, of course, the creation of an underclass acclimated to not working; the supplement of cash and noncash benefits with income from crime and the underground economy; and the government resorting to negative incentives such as mandatory work programs.