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A Good Policy Gone Bad: The Strange Case of the Non-Refundable State EITC

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  • Saul D. Hoffman

    (Department of Economics,University of Delaware)

Abstract

Twenty states and several cities have adopted their own EITC programs, typically piggy-backing on the federal EITC by offering benefits equal to some designated proportion of the federal benefits. In all but four states, the state EITC is fully refundable, just like the Federal EITC. Using the example of Delaware, which adopted a non-refundable EITC in 2006, I show the peculiar distribution effects of such a policy. Roughly the lower income half of the EITC recipient population is ineligible for the Delaware non-refundable EITC. Married couples and both single-parent and two-parent families with less than two children also often lose eligibility and/or a substantial portion of benefits. The average benefit received by Federal EITC recipients falls by almost two-thirds. It is likely that these impacts of EITC non-refundability results would hold in other states considering such a policy.

Suggested Citation

  • Saul D. Hoffman, 2007. "A Good Policy Gone Bad: The Strange Case of the Non-Refundable State EITC," Working Papers 07-06, University of Delaware, Department of Economics.
    • Handle: RePEc:dlw:wpaper:07-06.
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    File URL: http://graduate.lerner.udel.edu/sites/default/files/ECON/PDFs/RePEc/dlw/WorkingPapers/2007/UDWP2007-06.pdf
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    References listed on IDEAS

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    1. Saul D. Hoffman & Laurence S. Seidman, 1990. "The Earned Income Tax Credit," Books from Upjohn Press, W.E. Upjohn Institute for Employment Research, number eitc, November.
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    Cited by:

    1. Spencer, Rachael A. & Livingston, Melvin D. & Woods-Jaeger, Briana & Rentmeester, Shelby T. & Sroczynski, Nolan & Komro, Kelli A., 2020. "The impact of temporary assistance for needy families, minimum wage, and Earned Income Tax Credit on Women's well-being and intimate partner violence victimization," Social Science & Medicine, Elsevier, vol. 266(C).

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    More about this item

    Keywords

    EITC; Earned Income Tax Credit;

    JEL classification:

    • H72 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Budget and Expenditures
    • H75 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Government: Health, Education, and Welfare
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • I39 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Other

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