Distinguishing Between Short-Term and Long–Term Recipients of the Earned Income Tax Credit

Timothy Dowd ()

National Tax Journal, 2005, vol. 58, issue 4, 807-28

Abstract: Since its enactment in 1975, the Earned Income Tax Credit (EITC) has evolved from a small program to alleviate some of the tax burden of the payroll and income tax on low–income working parents to become a significant part of the Federal government's redistribution efforts. This paper presents preliminary work from a unique data set and is meant to raise questions as well as present new evidence regarding the EITC. This study examines a panel of taxpayers over 15 years to determine the extent to which the EITC acts as a safety net for workers experiencing temporary income and employment shocks. I find that between 40 and 50 percent of EITC recipients claim the EITC for short periods of time (one to two years). Finally, I provide descriptive information about the characteristics of temporary versus more permanent EITC recipients, with a particular focus on the effects of changes in the economy and state welfare policies.

Date: 2005
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Persistent link: https://EconPapers.repec.org/RePEc:ntj:journl:v:58:y:2005:i:4:p:807-28

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