State Earned Income Tax Credit Research Articles

No Change in Substance Use Disorders or Overdose After Implementation of State Earned Income Tax Credit (EITC)

BackgroundInadequate income is associated with higher likelihood of experiencing a substance use disorder (SUD). This study tests whether the earned income tax credit (EITC), which issues supplemental income for workers with children in the U.S., is associated with lower rates of SUD and fatal overdose. MethodsWe examined the effects of state-level refundable EITC presence and generosity (i.e., state EITC rate as a % of federal rate) on SUD-related outcomes (SUD prevalence and intentional and unintentional fatal overdose) using a difference-in-difference methodology, with both two-way fixed-effects models and event study plots. Several sensitivity analyses were conducted to assess the robustness of findings. Five data sources were used to create a combined state-level longitudinal dataset. ResultsWe did not find significant effects of refundable EITC presence or generosity on unintentional or intentional fatal overdose or SUD prevalence in two-way models. Event study models detected a very slight upward shift in SUD prevalence following refundable EITC implementation (not seen in sensitivity analyses) and no significant effects of EITC implementation on any of the fatal overdose outcomes. ConclusionsEvidence regarding income support programs is being highly sought by policy makers as income support programs have become increasingly popular policy levers since the start of the COVID-19 pandemic. Our study indicates EITC policies likely have no impact on SUD or overdose, however, other income support programs without family restrictions are important to investigate further.

Revisiting the effects of state earned income tax credits on infant health: a quasi-experimental study using contiguous border counties approach

BackgroundTo examine the effects of refundable state earned income tax credits (EITC) on infant health.MethodsWe use the restricted-access U.S. birth certificate data with county codes from 1989 to 2018. Birth outcomes include birth weight, low birth weight, gestational weeks, preterm birth, and the fetal growth rate. The analytical sample includes single mothers with high school education or less. Two specifications of two-way fixed effects models are employed. The first specification accounts for shared time trends across all states/counties. The second specification estimates effects based on EITC changes within contiguous counties across state borders which accounts for contemporaneous events specific to each contiguous county pair. Models are estimated pooling and stratifying by parity subgroups.ResultsUnder the first specification, refundable state EITC is associated with improved birth outcomes. Pooling all parity, a 10%-point increase in refundable EITC is associated with an 8-gram increase in birth weight (95% CI: 2.9,14.6). The effect increases by parity. In contrast, the estimates from the second model are much smaller and statistically non-significant, both pooling and stratifying by parity.ConclusionsComparing contiguous counties across state borders, there is no evidence that refundable state EITC affects birth outcomes. However, the estimates still do not rule out moderate to large benefits for third or higher born infants.

Measuring take-up of the California EITC with state administrative data

The Earned Income Tax Credit (EITC) is the largest cash-based means-tested transfer program in the United States. In 2021, 31 million households received $64 billion from the federal EITC. Twenty-eight states also offer eligible taxpayers a supplement to the federal program. An estimated one-fifth of eligible households fail to claim the federal credit, but little is known about take-up of these state programs. We use administrative data from California on the population of Supplemental Nutrition Assistance Program (SNAP) recipients linked to state tax records to estimate the number of households who are eligible for California’s supplement to the federal EITC (CalEITC) but do not claim it. We find that over 400,000 households who received SNAP benefits and who were eligible for the state EITC in 2017 did not receive the credit. This includes approximately 40,000 eligible households who claimed the federal EITC but not the state credit; nearly 98,000 eligible households who filed a state tax return but did not claim the state or federal credit; and roughly 270,000 eligible households who did not file a state tax return. The corresponding take-up rate for the CalEITC among eligible SNAP-enrolled households was 54%. Altogether, these households left a total of $71 million in state EITC funds on the table. If received, these credits would have increased incomes among these households by 2.7% and increased total state EITC outlays by 20%.

Promoting health equity through poverty alleviation policy: Factors associated with receipt of the 2021 U.S. Child Tax Credit in a nationwide sample

IntroductionThe 2021 temporary expansion of the U.S. Child Tax Credit (CTC) was a potent policy that addressed poverty as a critical social determinant of health. Yet policies can only have their intended effects if they are implemented appropriately, and it is well known that not all who were eligible for the CTC received it. In this study, we investigated which individual- and state-level factors were correlated with receipt of the 2021 expanded CTC among eligible families. MethodsWe used data from the U.S. Census Bureau Household Pulse Survey and included 76,994 CTC-eligible individuals. We used multivariable logistic regressions to evaluate individual- and state-level factors associated with self-reported CTC receipt during July–December 2021. ResultsRoughly two-thirds of the CTC-eligible sample reported CTC receipt. CTC receipt was higher among eligible individuals who were female, aged 35–44 years (relative to younger individuals), Black, and married. Receipt was also higher among those with at least some college education, two or more children, and family income above $25,000, and among recipients of the Supplemental Nutrition Assistance Program (SNAP) and Medicaid. For state-level factors, SNAP and Medicaid caseloads and the state earned income tax credit rate were associated with decreased receipt. ConclusionAs Congress debates whether to make the CTC expansion permanent, this study provides timely evidence to inform poverty alleviation programs to increase participation among eligible and marginalized groups and achieve health equity.

The effect of state Earned Income Tax Credit (EITC) eligibility on food insufficiency during the COVID-19 pandemic.

This paper uses data from the Household Pulse Survey to examine whether and for how long the eligibility to receive state Earned Income Tax Credit (EITC) benefits reduced self-reported household food insufficiency among lower-income households with dependent children during the COVID-19 pandemic. The results of models estimated using difference-in-differences (DD) and difference-in-difference-in-differences (DDD) methods suggest that state EITC eligibility, on average, reduced food insufficiency by about 3 percentage points between March 2021 and early October 2021. However, the results of models estimated using an event study method show that the effect was not visible in all the post-March bimonthly periods. Overall, this paper finds some evidence to suggest that state EITC eligibility reduced food insufficiency over a short period.

The Impact of Social Networks on EITC Claiming Behavior

Abstract Using the Social Connectedness Index (Bailey, Cao, Kuchler, Stroebel et al., 2018) to capture county-to-county Facebook linkages, I explore how county-level earned income tax credit (EITC) claiming behavior changes when the county's out-of-state social network is exposed to a newly implemented state EITC. Having more out-of-state friends face a state EITC shifts the composition of EITC claims toward more self-employment claiming. EITC-claiming households' income distribution also shifts, moving away from the EITC region with smaller credits, toward income levels that generate the largest EITC. This mimics the direct impacts of state-level EITC policies, consistent with social networks increasing information or salience about EITC policy.

Earned Income Tax Credit and Youth Violence: Findings from the Youth Risk Behavior Surveillance System.

Family- and neighborhood-level poverty are associated with youth violence. Economic policies may address this risk factor by reducing parental stress and increasing opportunities. The federal Earned Income Tax Credit (EITC) is the largest cash transfer program in the US providing support to low-income working families. Many states have additional EITCs that vary in structure and generosity. To estimate the association between state EITC and youth violence, we conducted a repeated cross-sectional analysis using the variation in state EITC generosity over time by state and self-reported data in the Youth Risk Behavior Surveillance System (YRBSS) from 2005 to 2019. We estimated the association for all youth and then stratified by sex and race and ethnicity. A 10-percentage point greater state EITC was significantly associated with 3.8% lower prevalence of physical fighting among youth, overall (PR: 0.96; 95% CI 0.94-0.99), and for male students, 149 fewer (95% CI: -243, -55) students per 10,000 experiencing physical fighting. A 10-percentage point greater state EITC was significantly associated with 118 fewer (95% CI: -184, -52) White students per 10,000 experiencing physical fighting in the past 12months while reductions among Black students (75 fewer; 95% CI: -176, 26) and Hispanic/Latino students (14 fewer; 95% CI: -93, 65) were not statistically significant. State EITC generosity was not significantly associated with measures of violence at school. Economic policies that increase financial security and provide financial resources may reduce the burden of youth violence; further attention to their differential benefits among specific population subgroups is warranted.

Evidence for the Role of State-Level Economic Policy in HIV Risk Reduction: State Earned Income Tax Credit Generosity and HIV Risk Behavior Among Single Mothers

We investigated the impact of State-level Earned Income Tax Credit (SEITC) generosity on HIV risk behavior among single mothers with low education. We merged individual-level data from the Behavioral Risk Factor Surveillance System (2002–2018) with state-level data from the University of Kentucky Center for Poverty Research and conducted a multi-state, multi-year difference-in-differences (DID) analysis. We found that a refundable SEITC ≥ 10% of the Federal Earned Income Tax Credit was associated with 21% relative risk reduction in reporting any high-risk behavior for HIV in the last year, relative to no SEITC. We also found that a 10-percentage point increase in SEITC generosity was associated with 38% relative risk reduction in reporting any high-risk HIV behavior in the last year. SEITC policy may be an important strategy to reduce the burden of HIV infections among women with low socioeconomic status, particularly single mothers.

883-P: Associations of State Earned Income Tax Credits with Self-Reported Health Status among U.S. Adults with Diabetes, 2000–2016

Persons with low socioeconomic status are disproportionately affected by diabetes and among people with diabetes, those with lower incomes tend to have poorer health status than those with higher incomes. Few studies have examined whether policies to improve the financial status of low-income populations can improve health outcomes among people with diabetes. Using data on state earned income tax credit (EITC) policies from the National Bureau of Economic Research and self-reported health status from the 2000-2016 Behavioral Risk Factor Surveillance System (BRFSS) , we examined the association of state EITC with poor health status among United States (US) adults with self-reported diagnosed diabetes. Poor overall health was defined as self-reported general health status of “fair” or “poor” in BRFSS. Poor mental and physical health were defined as having at least 14 self-reported days in poor mental or poor physical health in the past 30 days, respectively. State EITC was defined as the state’s EITC amount as a percentage of the federal EITC. We used weighted logistic regression to model the effect of EITC variation across states and over years and calculated the marginal effects of state EITC on health status, controlling for poverty, race, education, unemployment, state gross domestic product (GDP) , state Medicaid expansion, and state minimum wage policy. Poisson regression models were conducted as a sensitivity analysis. A 10-percentage point increase in the state EITC was associated with a 3% lower rate of poor mental health status (-2,759 per 100,000, 95% CI = -5,494, -25) . The associations of the state EITC with physical health and overall health status were not statistically significant. The results were robust to choice of model based on the sensitivity analysis. Policies that increase income retained may help to improve self-reported mental health status of US adults with diabetes. Disclosure S.Tang: None. Y.Chen: None. D.B.Rolka: None. G.Imperatore: None. C.S.Holliday: None. P.Zhang: None.

The impact of income on mental health

The impact of income on mental health

The Earned Income Tax Credit and Maternal Time Use: More Time Working and Less Time with Kids?

Parents spend considerable time and resources investing in their children's development. Given evidence that the Earned Income Tax Credit (EITC) aects maternal labor supply, we investigate how the EITC affects a broad array of time-use activities, focusing on the amount and nature of time spent with children. Using 2003-2018 time-use data, we find that federal and state EITC expansions increase maternal work time, which reduces time devoted to home production, leisure, and time with children. However, for children of all ages, almost none of the reduction comes from time devoted to investment activities, such as active learning and development activities.

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.

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.

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

Tax Equality for Immigrants: The Indispensable Ingredient for Remedying Child Poverty in the United States

Both at the federal and state levels, tax credits have proved effective policy instruments to combat poverty, and they are at the heart of President Biden's massive initiative on childhood poverty. However, about one of every five children suffering poverty in the United States has an unauthorized immigrant parent and thus little or no access to tax credits. That is nearly two million children, and 85 percent of them are US citizens. Achieving historic reductions in childhood poverty thus will be impossible without remedying the eligibility exclusions and bureaucratic impediments that unauthorized immigrants face in the US tax system. All individuals who make money and reside in the United States are obliged to pay federal income taxes via a return filed with the Internal Revenue Service (IRS). For unauthorized immigrants and others who do not qualify for a Social Security Number (SSN) that requires an Individual Taxpayer Identification Number (ITIN). In this two-tier system, ITIN filers have the same income tax due as Social Security filers, but they do not receive the same credits. ITIN filers have never been eligible for the Earned Income Tax Credit (EITC) and some of their children were excluded from the Child Tax Credit (CTC) in the Trump administration's 2017 tax bill. Both credits are highly effective anti-poverty programs, providing immediate relief while also incentivizing work and earnings. The tax credits are the critical policy tool in Biden's American Plan for reducing child poverty, and they would be funded through the budget reconicilation legislation devised by Congressional Democrats in the summer of 2021. As summer drew to a close, ITIN inclusion was beginning to enter the discussion among advocates and legislators about the bill's detailed provisions. But eligibility is not the only barrier. Internal government monitors have repeatedly criticized the IRS for heavy-handed and inefficient practices that have placed undue burdens on ITIN taxpayers and that have hindered compliance with the law. The use of ITINs has plummeted in recent years from a high of 4.6 million returns in 2014 to 2.5 million in 2020. Prompted by the economic losses and the medical toll suffered by unauthorized immigrants during the pandemic and by their newly valued roles as “essential workers,” the federal government and several state governments have taken important steps to lessen the exclusion of ITIN taxpayers. The first federal stimulus package excluded not only ITIN holders but also their family members with SSNs. Congress extended eligibility to members of ITIN households with SSNs for the second and third stimulus checks. Meanwhile, California, Colorado, Maryland, New Mexico, Washington, Maine, and Oregon broke with the federal government and made ITIN filers fully eligible for their state EITCs, and as of July 2021 similar measures were under consideration in four other states. Early evidence from California and Colorado suggests that ITIN inclusion could prove a highly effective means of reaching poor children with the benefits of a state EITC. Child poverty can only be attacked successfully if ITIN households receive equal access to federal and state tax credit programs. This can be accomplished if: Congress and state legislatures permit full eligibility for all EITC and CTC programs. Congress mandates reforms to the procedures for getting and keeping an ITIN that have been proposed in multiple reports to Congress by the Taxpayer Advocate Service, an internal monitor at the IRS. Immigrants’ rights advocates and other civil society organizations, with government support, undertake a multi-year campaign to encourage ITIN application and use. The IRS receives funding to support a greatly expanded ITIN program.

The Minimum Wage, EITC, and Criminal Recidivism

For recently released prisoners, the minimum wage and the availability of state Earned Income Tax Credits (EITCs) can influence both their ability to find employment and their potential legal wages relative to illegal sources of income, in turn affecting the probability they return to prison. Using administrative prison release records from nearly six million offenders released between 2000 and 2014, we use a difference-in-differences strategy to identify the effect of over two hundred state and federal minimum wage increases, as well as 21 state EITC programs, on recidivism. We find that the average minimum wage increase of $0.50 reduces the probability that men and women return to prison within 1 year by 2.8%. This implies that on average the effect of higher wages, drawing at least some released prisoners into the legal labor market, dominates any reduced employment in this population due to the minimum wage. These reductions in returns to incarcerations are observed for the potentially revenue generating crime categories of property and drug crimes; prison reentry for violent crimes are unchanged, supporting our framing that minimum wages affect crime that serves as a source of income. The availability of state EITCs also reduces recidivism, but only for women.

The impact of state earned income tax credit increases on material and medical hardship

AbstractThe federal Earned Income Tax Credit (EITC) provides substantial financial assistance to low‐ and moderate‐income workers and has been shown to reduce poverty and encourage employment. Many US states have also implemented their own EITCs to supplement the federal tax credits. Leveraging unique administrative and survey data and employing a difference‐in‐differences approach, this study investigates how changes in state EITC benefits between 2012 and 2016 impacted the levels of material and medical hardships in states that expanded or enacted state credits. We find that small changes in state EITC levels can alleviate medical hardship, but not most other types of hardship, especially when states experience a greater benefit increase or implement new state EITCs. Our research points to the limitations of using relatively modest tax credits to offset many of the economic challenges faced by low‐ and moderate‐income households.

The Effects of Refundable and Nonrefundable State Earned Income Tax Credit Programs on Health of Mothers of Two or More Children

More than one-half of U.S. states have enacted Earned Income Tax Credit (EITC) programs. Yet little is known about the effects of state EITC programs on the health of recipients. This study examines the effects of refundable and nonrefundable state EITC programs on the health of single low-educated women of childbearing age with two or more children, the group receiving the highest credits on average. The data come from the Behavioral Risk Factors Surveillance Survey from 1993 through 2018. Outcomes include self-rated general health, days not in good physical health, and days not in good mental health, both in the past 30days. The research design accounts for time-invariant differences between states, national trends shared across states, and other state policies. Depending on the outcome measure, the analytical sample ranges between 103,362 and 107,782 mothers. Refundable state EITC programs are associated with improvements in all three health outcomes. A 10 percentage-point increase in refundable state EITC is associated with better self-rated health by 0.02 points (95% confidence interval [CI], 0.006-0.04) on a 1- to 5-point scale, or 0.7% improvement above the sample mean; 0.2 fewer days not in good physical health (95% CI, -0.21 to -0.12) in the past 30days, or 4.4% lower than the sample mean; and 0.2 fewer days not in good mental health (95% CI, -0.29 to -0.1), or 3.4% lower than the sample mean. Estimates for nonrefundable EITC programs are smaller and not statistically significant. As expected, there are small and statistically insignificant refundable EITC effects for single low-educated childless women who receive low state EITC benefits on average. These findings suggest that an increase in refundable state EITC improves the health of single women of childbearing age with low incomes and two or more children; this factor may also lead to better preconception health. There is no evidence for effects from nonrefundable state EITC.

The Earned Income Tax Credit and Intimate Partner Violence.

Intimate partner violence (IPV) is a serious public health problem in the United States with adverse consequences for affected individuals and families. Recent reviews of the literature suggest that economic policies should be further investigated as part of comprehensive strategies to address IPV. The Earned Income Tax Credit (EITC) is the nation's largest anti-poverty program for working parents, and especially benefits low-income women with children, who experience an elevated risk of IPV. The EITC may prevent IPV by offering financial resources; such resources may help individuals experiencing IPV leave abusive relationships or address IPV risk factors, thereby preventing entry into abusive relationships. However, the association between EITC generosity and IPV has not been previously examined. We used state-level and individual-level datasets to examine the association between EITC generosity and IPV. Our state-level data source was the nationally representative National Crime Victimization Survey (NCVS; N = ~ 95,000 households per year). For NCVS, we used a difference-in-difference approach to investigate the relationship between state EITC generosity and IPV rates. We also used individual-level longitudinal data from the Fragile Families and Child Well-being Study (n = 13,422 person-waves). Using this cohort of US families at higher risk for IPV, we evaluated associations between estimated EITC benefits based on the mother's state of residence and number of children and self-reported IPV. In both state- and individual-level analyses, no significant association between state EITC benefits and IPV was found. Factors that may account for these null findings include program ineligibility for individuals who separate from abusive spouses. Future research efforts should more closely examine EITC policy implementation processes and the lived experience of participating in anti-poverty programs for people experiencing IPV.

The effects of state earned income tax credits on mental health and health behaviors: A quasi-experimental study.

The earned income tax credit (EITC) is the largest U.S. poverty alleviation program for families with children, and state EITC policies provide a modest supplement to the federal program. Yet there are few studies of the effects of state EITC policies on population health. We examined whether state EITC policies affect mental health and health behaviors. Participants were drawn from the 1995-2015 waves of the Panel Study of Income Dynamics, a diverse national cohort study (N=10,567). We used a quasi-experimental difference-in-differences analysis to examine the effects of state EITC programs among eligible individuals, accounting for secular trends among similar individuals in non-EITC states. Outcomes included self-reported general health, psychological distress, alcohol use, and smoking. The mean size of state EITC refunds in our sample was $265 for eligible individuals. In the overall sample, state EITC programs were not associated with any health outcomes of interest. This finding was robust to alternative specifications, and similar in subgroup analyses by gender and marital status. This study suggests that state EITC programs, which tend to provide smaller refunds than the federal program, may not be large enough to have a positive impact on mental health and health behaviors. These findings may inform policymaking related to the generosity of state EITC programs, especially as states seek to address the socioeconomic consequences of the COVID-19 pandemic.