Tax Policy Toward Low-Income Families

Hilary Hoynes and Jesse Rothstein

No 22080, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: In this paper, we review the most prominent provision of the federal income tax code that targets low-income tax filers, the Earned Income Tax Credit (EITC), as well as the structurally similar Child Tax Credit (CTC). We frame the paper around what we see as the programs’ goals: distributional, promoting work, and limiting administrative and compliance costs. We review what is known about program impacts and distributional consequences under current law, drawing on simulations from the Tax Policy Center. We conclude that the EITC is quite successful in meeting its three goals. In contrast, most of the benefits of the CTC go to higher income households. In addition to analyzing current law, we assess possible reforms that would reach groups – for the EITC, those without children; for the CTC, those with very low earnings – who are largely missed under current policy.

JEL-codes: H24 H53 I38 (search for similar items in EconPapers)
Date: 2016-03
New Economics Papers: this item is included in nep-pub
Note: CH LS PE
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Citations: View citations in EconPapers (11)

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Related works:
Working Paper: Tax Policy toward Low-Income Families (2017)
Working Paper: Tax Policy Toward Low-Income Families (2016)
Working Paper: Tax Policy Toward Low-Income Families (2016)
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