On the Progressivity of the Child Care Tax Credit: Snapshot versus Time-Exposure Incidence

Rosanne Altshuler and Amy Schwartz

Departmental Working Papers from Rutgers University, Department of Economics

Abstract: We evaluate the progressivity of the federal child care tax credit using the Ernst and Young/University of Michigan panel of tax return data. Incidence measures are calculated using both annual and "time-exposure" income to measure ability to pay. Both indicate that the benefits of the credit are progressively distributed. Replacing annual with time-exposure income dramatically increases the proportion of the credit received by lower-income taxpayers and yields a more even distribution of benefits across middle- and upper-income taxpayers. Our results suggest that policy-makers should use both income measures to evaluate the credit.

Keywords: child care tax credit; progressivity (search for similar items in EconPapers)
JEL-codes: H22 H24 (search for similar items in EconPapers)
Date: 1996-09-25
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Citations: View citations in EconPapers (8)

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Journal Article: On the Progressivity of the Child Care Tax Credit: Snapshot Versus Time-Exposure Incidence (1996)
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Persistent link: https://EconPapers.repec.org/RePEc:rut:rutres:199416

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