Do EITC expansions pay for themselves? Effects on tax revenue and government transfers

• 成果类型: Article
• 署名作者: Bastian, Jacob E.; Jones, Maggie R.
• 署名单位: Rutgers University System; Rutgers University New Brunswick
• 刊物名称: JOURNAL OF PUBLIC ECONOMICS
• ISSN/ISSBN: 0047-2727
• DOI: 10.1016/j.jpubeco.2020.104355
• 发表日期: 2021
• 关键词: Earned income tax credit; taxes; Public assistance; Government transfers; Women?s labor supply; fiscal policy

摘要

This paper calculates the EITC?s net cost by estimating effects, both direct and through recipients? behavioral changes, on tax revenue and government transfer spending. We show that the EITC increases labor supply and income, thereby increasing the taxes households pay and reducing the government transfer payments they receive. Using linked IRS?CPS data and several EITC policy changes, and focusing on married and unmarried women, we find that the EITC?s net cost is only 17 percent of the ($70 billion) budgetary cost over a one-year period. Although the EITC is one of the U.S.?s largest and most important public assistance programs, the EITC is actually one of the U.S.?s least expensive anti-poverty programs. This paper calculates the EITC?s net cost by estimating effects, both direct and through recipients? behavioral changes, on tax revenue and government transfer spending. We show that the EITC increases labor supply and income, thereby increasing the taxes households pay and reducing the government transfer payments they receive. Using linked IRS?CPS data and several EITC policy changes, and focusing on married and unmarried women, we find that the EITC?s net cost is only 17 percent of the ($70 billion) budgetary cost over a one-year period. Although the EITC is one of the U.S.?s largest and most important public assistance programs, the EITC is actually one of the U.S.?s least expensive anti-poverty programs. ? 2021 Elsevier B.V. All rights reserved.