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Income Mobility and the Earned Income Tax Credit

Author

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  • John B. Horowitz

    (Department of Economics, Ball State University, Muncie, IN 47306.)

Abstract

Households who work full-time at minimum wage jobs earn more than the phasein range of the Earned Income Tax Credit (EITC). This means that the EITC mainly acts as a negative income tax. However, most families are eligible to receive the EITC for a relatively short time. Seventy-four percent of new EITC families will lose their eligibility in two years or less. Sixty-one percent of families already on the EITC will lose their eligibility in three years or less. EITC families are much more mobile than AFDC families. The main reason that families gain or lose EITC eligibility is changes in earnings. Copyright 2002, Oxford University Press.

Suggested Citation

  • John B. Horowitz, 2002. "Income Mobility and the Earned Income Tax Credit," Economic Inquiry, Western Economic Association International, vol. 40(3), pages 334-347, July.
    • Handle: RePEc:oup:ecinqu:v:40:y:2002:i:3:p:334-347
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    Cited by:

    1. David Splinter, 2019. "Who Pays No Tax? The Declining Fraction Paying Income Taxes And Increasing Tax Progressivity," Contemporary Economic Policy, Western Economic Association International, vol. 37(3), pages 413-426, July.
    2. Jeff Larrimore & Jake Mortenson & David Splinter, 2020. "Presence and Persistence of Poverty in US Tax Data," NBER Chapters, in: Measuring Distribution and Mobility of Income and Wealth, pages 383-409, National Bureau of Economic Research, Inc.
    3. Nicole Simpson & Devin Reilly & Kartik Athreya, 2010. "The Earned Income Tax Credit: Insurance Without Disincentives?," 2010 Meeting Papers 1103, Society for Economic Dynamics.
    4. Charles Gottlieb & Maren Froemel, 2015. "General Equilibrium Effects of Targeted Transfers: The case of EITC," 2015 Meeting Papers 1264, Society for Economic Dynamics.
    5. Gottlieb, Charles & Froemel, Maren, 2015. "General Equilibrium Effects of Targeted Transfers: The case of the Earned Income Tax Credit (EITC)," VfS Annual Conference 2015 (Muenster): Economic Development - Theory and Policy 113175, Verein für Socialpolitik / German Economic Association.
    6. Jeff Larrimore & Jacob Mortenson & David Splinter, 2015. "Income and Earnings Mobility in U.S. Tax Data," Finance and Economics Discussion Series 2015-61, Board of Governors of the Federal Reserve System (U.S.).
    7. Otto Lenhart, 2021. "Earned income tax credit and crime," Contemporary Economic Policy, Western Economic Association International, vol. 39(3), pages 589-607, July.
    8. Sara LaLumia & James M. Sallee & Nicholas Turner, 2015. "New Evidence on Taxes and the Timing of Birth," American Economic Journal: Economic Policy, American Economic Association, vol. 7(2), pages 258-293, May.
    9. Otto Lenhart, 2019. "The effects of income on health: new evidence from the Earned Income Tax Credit," Review of Economics of the Household, Springer, vol. 17(2), pages 377-410, June.
    10. Maggie R. Jones, 2014. "The EITC over the business cycle: Who benefits?," CARRA Working Papers 2014-15, Center for Economic Studies, U.S. Census Bureau.
    11. Lauren E. Jones & Guangyi Wang & Tansel Yilmazer, 2022. "The long‐term effect of the Earned Income Tax Credit on women's physical and mental health," Health Economics, John Wiley & Sons, Ltd., vol. 31(6), pages 1067-1102, June.
    12. Nicole Simpson & Jill Tiefenthaler & Jameson Hyde, 2010. "The Impact of the Earned Income Tax Credit on Economic Well-Being: A Comparison Across Household Types," Population Research and Policy Review, Springer;Southern Demographic Association (SDA), vol. 29(6), pages 843-864, December.
    13. Tim Dowd & John B. Horowitz, 2011. "Income Mobility and the Earned Income Tax Credit," Public Finance Review, , vol. 39(5), pages 619-652, September.

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