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;
Find related papers by JEL classification:
- 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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- William M. Gentry & Alison P. Hagy, 1996.
"The Distributional Effects of the Tax Treatment of Child Care Expenses,"
in: Empirical Foundations of Household Taxation, pages 99-134
National Bureau of Economic Research, Inc.
- William M. Gentry & Alison P. Hagy, 1995. "The Distributional Effects of the Tax Treatment of Child Care Expenses," NBER Working Papers 5088, National Bureau of Economic Research, Inc.
- Duclos, J.Y., 1995.
"Economic Isolation, Inequality, and the Suits Index of Progressivity,"
9510, Laval - Recherche en Politique Economique.
- DUCLOS, Jean-Yves, 1995. "Economic Isolation, Inequality, and the Suits Index of Progressivity," Cahiers de recherche 9510, Université Laval - Département d'économique.
- Duclos, Jean-Yves, 1998. "Social evaluation functions, economic isolation and the Suits index of progressivity," Journal of Public Economics, Elsevier, vol. 69(1), pages 103-121, July.
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