On the Progressivity of the Child Care Tax Credit: Snapshot versus Time-Exposure Incidence
AbstractWe 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.
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Bibliographic InfoPaper provided by Rutgers University, Department of Economics in its series Departmental Working Papers with number 199416.
Date of creation: 25 Sep 1996
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child care tax credit; progressivity;
Other versions of this item:
- Altshuler, Rosanne & Schwartz, Amy Ellen, 1996. "On the Progressivity of the Child Care Tax Credit: Snapshot Versus Time-Exposure Incidence," National Tax Journal, National Tax Association, vol. 49(1), pages 55-71, March.
- H22 - Public Economics - - Taxation, Subsidies, and Revenue - - - Incidence
- H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
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