The Earned Income Tax Credit and Reported Self-Employment Income
AbstractThe EITC subsidizes earnings from both wages and self–employment. This paper uses tax return data to investigate how the EITC affects the reporting of self–employment income to the IRS. A difference–in–difference strategy is used, considering three EITC expansions and comparing filers with and without children. Expansions are predicted to increase the reporting of self–employment income in the phase–in region and to reduce it in the phase–out region. Among the lowest–income filers, the 1994 expansion is associated with a significant increase in the probability of reporting positive self–employment income, equal to 3.2 percentage points for unmarried filers and 4.1 percentage points for married filers.
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Bibliographic InfoArticle provided by National Tax Association in its journal National Tax Journal.
Volume (Year): 62 (2009)
Issue (Month): 2 (June)
Other versions of this item:
- Sara LaLumia, 2009. "The Earned Income Tax Credit and Reported Self-Employment Income," Department of Economics Working Papers 2009-07, Department of Economics, Williams College.
- H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
- H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
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