Earned Income Tax Credit Research Articles

The long-term effect of the Earned Income Tax Credit on women's physical and mental health.

Using a novel method, and data from the National Longitudinal Survey of Youth 1979 (NLSY79), we estimate the cumulative, long-term, causal effect of Earned Income Tax Credit (EITC) eligibility on women's physical and mental health at age 50. We find that an increase in lifetime eligible EITC benefits is associated with long-term improvements in physical health, such as reduced occurrence of activity-limiting health problems and reduced reported diagnoses of mild and severe diseases. We explore intermediate health behaviors and outcomes, and find that an increase in lifetime eligible EITC benefits increases the number of hours worked and access to employer-sponsored health insurance, and decreases body mass index in the short-term. We find no significant effects of the EITC on mental health at age 50. Finally, we find that White women benefit disproportionately from the EITC in terms of mobility-related health issues, while Black and Hispanic women benefit in terms of lung-related illnesses like asthma, as well as cancer and stroke.

The Role of Offset in the Collection of Federal Taxes

The legal principle of offset has played a key role in debt collection by private parties for centuries. In 2021, offset continues to play an equally essential role in the United States government’s collection of debts owed to it, accounting for billions of dollars in funds taken from outgoing payments. The right of offset arises when two parties owe each other debts. The party asserting offset can subtract what is owed to them from what they owe, allowing the parties to avoid an unnecessary transaction. Offset thus makes intuitive sense, simplifying two payment flows into one. But offset becomes far more complex when one of the parties is the federal government, which is unlike a traditional private creditor in important ways. Offset has perhaps its largest impact in the tax system, where Congress has legislated that the Internal Revenue Service (the “Service”) has the authority (and sometimes, the mandate) to offset tax refunds. Refunds are commonly offset when a taxpayer owes prior year tax liabilities, other agency debts (e.g., student loans), state taxes or past-due child support. Despite its frequent use by the Service, offset is subject to minimal procedural protections, likely due to its origin in longstanding common law doctrine. Unlike other forms of tax collection, offset does not carry a right to prepayment judicial review in Tax Court. Nor does offset require the Service to issue a notice to the taxpayer prior to taking collection action. Courts also treat offset inconsistently when the applicable taxpayer/debtor is protected by a collection stay under Title 26 or Title 11, allowing offset in some scenarios and denying it in others. Finally, Congress and the Service have often failed to use their authority to make offset more equitable, particularly as applied to low-income taxpayers. The Service has a limited administrative remedy available for taxpayers to affirmatively request bypass from the offset of their refund to a tax debt. But the remedy is little-publicized, little-used and difficult to administer. During the COVID-19 pandemic and recession, Congress legislatively protected advance stimulus payments from some forms of offset. But Congress failed to make that protection expansive or to extend it to conventional tax refunds, both of which would have put needed funds in the hands of millions of taxpayers during an economic crisis. Similarly, the Service declined to exercise its statutory discretion to systemically suspend offset of conventional tax refunds to past tax liabilities. These issues extend to payments of the Earned Income Tax Credit (EITC), which are subject to offset. Both Congress and the Service have failed to acknowledge the EITC’s unique nature as a type of public benefit, treating it instead as a conventional tax refund subject to offset. This disproportionately hurts the low-income taxpayers, and their children, that the EITC was enacted to benefit. I argue that policymakers should pay closer attention to offset and make the necessary changes to apply it in a more equitable and logical manner.

The Earned Income Tax Credit and Short-Term Changes in Parents' Time Investments in Children.

This study examined whether the addition of household resources via the receipt of the U.S. Earned Income Tax Credit (EITC) affects short-term patterns of parents’ time investments in children, including time spent engaged with children and in activities related to their education. Using difference-in-differences analyses that exploit seasonal variation in federal EITC outlays with nationally representative time-diary data from the 2003 to 2017 American Time Use Survey-Current Population Survey (ATUS-CPS; N = 61,355) merged with state-level data from the University of Kentucky Center for Poverty Research (UKCPR) National Welfare Database, I estimate the plausibly causal effects of predicted EITC receipt on various measures of parents’ time investments in their children. I examine parents’ time spent directly engaged with children in enriching activities like play and reading and in activities related to children’s education among a low-socioeconomic sample (parents with less than a college degree). I find few associations between monthly federal EITC outlays and immediate changes in parents’ time investments, although there was evidence that greater EITC outlays predicted small increases in mothers’ time spent reading with or to children, particularly among mothers with young children, but also small decreases in fathers’ time spent in activities with children, particularly school-age children. Findings suggest that increases in household resources, even relatively small and annual increases, may have short-term effects on parent–child interactions and time use.

The Impact of Tax Refund Delays on the Experience of Hardship Among Lower-Income Households.

The Earned Income Tax Credit (EITC) provides substantial financial support to low-income workers in the USA, yet around a quarter of EITC payments are estimated to be erroneous or fraudulent. Beginning in 2017, the Protecting Americans from Tax Hikes Act of 2015 requires the Internal Revenue Service to spend additional time processing early EITC claims, delaying the issuance of tax refunds. Leveraging unique data, this paper investigates how delayed tax refunds affected the experience of hardship and unsecured debt among EITC recipients. Results indicate that early filers experienced increased food insecurity relative to later filers after the implementation of the refund delay.

State-Level Social and Economic Policies and Their Association With Perinatal and Infant Outcomes.

Rates of preterm birth and infant mortality are alarmingly high in the United States. Legislated efforts may directly or indirectly reduce adverse perinatal and infant outcomes through the enactment of certain economic and social policies. We conducted a narrative review to summarize the associations between perinatal and infant outcomes and four state-level US policies. We then used a latent profile analysis to create a social and economic policy profile for each state based on the observed policy indicators. Of 27 articles identified, nine focused on tax credits, eight on paid parental leave, four on minimum wages, and six on tobacco taxes. In all but three studies, these policies were associated with improved perinatal or infant outcomes. Thirty-three states had tax credit laws, most commonly the earned income tax credit (n = 28, 56%). Eighteen states had parental leave laws. Two states had minimum wage laws lower than the federal minimum; 14 were equal to the federal minimum; 29 were above the federal minimum; and 5 did not have a state law. The average state tobacco tax was $1.76 (standard deviation = $1.08). The latent profile analysis revealed three policy profiles, with the most expansive policies in Western and Northeastern US states, and the least expansive policies in the US South. State-level social and economic policies have the potential to reduce adverse perinatal and infant health outcomes in the United States. Those states with the least expansive policies should therefore consider enacting these evidence-based policies, as they have shown a demonstratable benefit in other states.

Inequities in Child Protective Services Contact Between Black and White Children.

Child protective services (CPS) contact occurs at substantially higher rates among Black than White families. The present study considers systemic racism as a central driver of this disparity and emphasizes racialized poverty as a possible mechanism. We used data from the Fragile Families and Child Wellbeing Study and logistic regression analyses to assess the associations between income poverty, a racialized experience, and CPS contact, separately among Black and White families. Results indicated that income poverty was a significant predictor of CPS contact among White families, who were protected by higher income. In contrast, income per se was not a significant predictor of CPS contact among Black families, who were instead impacted by racialized family regulation and consequences of poverty, such as poor health and depression. Refundable state Earned Income Tax Credit (EITC) policies were protective for Black families, and more expansive Temporary Assistance for Needy Families (TANF) programs decreased CPS contact for Black and White families. Implications include centering systemic racism and specifically racialized poverty as causes of racial inequities in CPS contact and rethinking the role of CPS in protecting children.

The Earned Income Tax Credit as supplementary food benefits and savings for durable goods

AbstractThe Earned Income Tax Credit (EITC) transferred more than $67 billion to taxpayers in 2016. We estimate changes in spending that occur following EITC disbursement. We make three key advances in identifying the effect: using estimated EITC dollar benefits to differentiate the impact of low from high benefits; estimating the impact by liquid assets; and, employing a triple‐difference model around the 1993 expansion and a separate triple‐difference model over the number of children. We find that the EITC acts as supplementary SNAP benefits for those with small EITC benefits, while those with larger benefits increase spending on durables, particularly automobiles.

State earned income tax credits and depression and alcohol misuse among women with children

About 30% of single mothers in the US live at or below the poverty line. Poverty is associated with higher risk of depression and substance use. We investigated associations between state earned income tax credit (EITC) policies and reported depressive symptoms and alcohol misuse among birthing parents who responded to Pregnancy Risk Assessment Monitoring Survey spanning 1990–2017. Nearly half of birthing parents reported no more than a high school education (45.4%; 95% CI: 45.3%–45.6%). An estimated 28.5% of birthing parents reported binge drinking in the three months prior to conception (95% CI: 28.3–28.8%). Among birthing parents, each 10 percentage-point increase in the generosity of state EITC relative to the federal EITC was associated with a lower prevalence of binge drinking (prevalence ratio = 0.96; 95% CI: 0.93–0.99) prior to conception. This association was more pronounced among birthing parents with no more than high school education (prevalence ratio = 0.92; 95% CI: 0.88–0.97). There was no association between state EITC and number of reported depressive symptoms prior to conception or after birth, except among those with lower educational attainment (prevalence ratio = 0.94; 95% CI: 0.89–0.99). Anti-poverty policies such as EITC may reduce the burden of alcohol misuse, especially among people with children.

Tax filing and take-up: Experimental evidence on tax preparation outreach and benefit claiming

The U.S. federal government, states, and non-profits all devote substantial resources to increasing take-up of refundable tax credits like the Earned Income Tax Credit (EITC) and Child Tax Credit (CTC) through educational outreach. We study a different approach to increasing take-up: policies that encourage tax filing. In a large field experiment, we find that IRS letters about free tax preparation modestly increased filing, with a large share of the new filers claiming the EITC and the CTC. The results suggest policies that increase filing can be an effective way to increase take-up of tax-administered social benefits, even policies that do not raise awareness of the benefit itself.

The Effects of EITC Correspondence Audits on Low-Income Earners

Each year, the United States Internal Revenue Service identifies taxpayers who may have erroneously claimed Earned Income Tax Credit (EITC) benefits and audits them through a mail correspondence process to verify their claims. This paper exploits the random variation arising from certain aspects of the audit selection process to estimate the impacts of these EITC correspondence audits on taxpayer behaviors. In the years after being audited, taxpayers are less likely to claim EITC benefits, and most of the reduction appears to be in EITC claims that may have been flagged for potential EITC noncompliance. Additionally, qualifying children on audited returns are more likely to be claimed by other taxpayers after the audits. These spillovers indicate that net overpayments may be less than gross overpayments, since ineligible qualifying children on audited returns could potentially be eligible qualifying children on other taxpayers’ returns. Lastly, EITC correspondence audits affect real economic activity, as wage earners experience changes in the likelihood of having wage employment in the years after being audited.

Racial Differences in the Association between the U.S. Earned Income Tax Credit and Birthweight.

We examined whether the largest U.S. poverty alleviation program for families, the Earned Income Tax Credit (EITC), has different associations with birthweight among women of different racial backgrounds. We analyzed data from the 1985-2015 waves of the Panel Study of Income Dynamics, a longitudinal cohort study of U.S. families (N=5,230 infants born to 3,672 women). The primary outcome was a continuous measure of birthweight, with secondary outcomes including low birthweight (LBW) and very LBW. Using rich sociodemographic data available in the Panel Study of Income Dynamics, we calculated the amount of EITC benefit for which women were eligible. We then examined the association of EITC benefit size with each outcome using multivariable regressions, examining the sample overall as well as racial subgroups (White, Black, or other). We found that larger EITC benefits were not associated with increased infant birthweight for the overall sample (18.37g per $1,000 of EITC; 95% confidence interval [CI], -2.62 to 33.36). There was an increase in birthweight for Black women (40.17g; 95% CI: 7.32 to 73.02), but not for White women (-1.86g; 95% CI, -33.33 to 29.60) or women of other races (-13.26g; 95% CI, -75.90 to 49.38). There was no association between EITC benefit size and the probability of LBW or very LBW. Results were robust to alternative model specifications. Social policies to address poverty may be effective at decreasing racial disparities in birthweight. Future work should examine potential mechanisms and the benefits of improved health outcomes for children later in life.

Intimate Partner Violence and Income: Quasi-Experimental Evidence from the Earned Income Tax Credit

Intimate Partner Violence and Income: Quasi-Experimental Evidence from the Earned Income Tax Credit

'Cracking Open' the Tax Casebook: Genre, Ideological Closure, and the Earned Income Tax Credit

'Cracking Open' the Tax Casebook: Genre, Ideological Closure, and the Earned Income Tax Credit

Domestic Violence and Income: Quasi-Experimental Evidence from the Earned Income Tax Credit

Domestic Violence and Income: Quasi-Experimental Evidence from the Earned Income Tax Credit

The Effect of State Earned Income Tax Credit (EITC) Eligibility on Food Insufficiency during the COVID-19 Pandemic

The Effect of State Earned Income Tax Credit (EITC) Eligibility on Food Insufficiency during the COVID-19 Pandemic

Effects of the Earned Income Tax Credit for Childless Adults: A Regression Discontinuity Approach

Effects of the Earned Income Tax Credit for Childless Adults: A Regression Discontinuity Approach

Investigating the Long-Run Impact of the Earned Income Tax Credit on Maternal Health

Investigating the Long-Run Impact of the Earned Income Tax Credit on Maternal Health

Policy Proposal: Modifying the Federal Earned Income Tax Credit to Better Help Households with One or No Dependents

This paper discusses four recommendations to improve the federal Earned Income Tax Credit, (EITC), which effectively acts as a wage boost for very-low-income and low-income workers. The credit amount varies tremendously depending on the number of dependents one has. This discrepancy is the paper’s main focus. This paper finds that the EITC’s failure to significantly help taxpayers without dependents, among other challenges, limits its ability to fulfill the program’s goals of incentivizing work and reducing poverty. The four recommendations on average would expand the availability and amount of the credit for most lower-income taxpayers. A conventional economic analysis suggests that these changes would likely incentivize work for many (though not all) affected individuals, increase consumer spending, reduce poverty, and increase equity. In a somewhat limited manner, this paper recommends the set of changes for enactment.

The Labor Market Effects of State and Local Expansions of the Earned Income Tax Credit

This study analyzes the labor market impact of state and local supplements to the federal Earned Income Tax Credit (EITC) program. Using Current Population Survey data from 1984 to 2020, I examine the differential impact of the state and local government supplements of the EITC on the labor force participation rates of married women. I examine whether the substantial expansions in the EITC program created by these supplements are an effective means of providing work incentives. In particular, do states and local counties with an EITC supplement witness higher female labor force participation rates? Exploiting variation in the policy over time both across states and within states between different demographic groups, I analyze whether the EITC supplements have raised labor supply among single women, and whether such differences exist in the labor supply of married women.

Equitable Expansion of the Earned Income Tax Credit to Include Incarcerated Individuals

Equitable Expansion of the Earned Income Tax Credit to Include Incarcerated Individuals