Whose Child Is This? Shifting of Dependents Among EITC Claimants Within the Same Household

Jeff Larrimore, Jacob Mortenson and David Splinter

No 2017-089, Finance and Economics Discussion Series from Board of Governors of the Federal Reserve System (U.S.)

Abstract: Using a panel of household level tax data, we estimate the degree to which dependents are \"reassigned\" between tax units within households, and how these reassignments affect combined tax liabilities. Reassigning dependents reduces combined tax liabilities on average, suggesting some household level coordination. Additionally, when EITC benefits expanded in 2009, reassignments increasingly involved adding a third child to tax returns to claim these new benefits. However, the subgroup reassigning towards three child tax units actually increased total household tax liabilities, suggesting that some taxpayers may prioritize minimizing their own tax burden or focus on particularly salient aspects of tax policy.

Keywords: Earned income tax credit; Household level tax coordination; Tax avoidance (search for similar items in EconPapers)
JEL-codes: D10 H24 H26 H31 H53 (search for similar items in EconPapers)
Pages: 29 pages
Date: 2017-08-22
New Economics Papers: this item is included in nep-pbe and nep-pub
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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https://www.federalreserve.gov/econres/feds/files/2017089pap.pdf (application/pdf)

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Journal Article: Whose Child Is This? Shifting of Dependents among EITC Claimants within the Same Household (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:fip:fedgfe:2017-89

DOI: 10.17016/FEDS.2017.089

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