IDEAS home Printed from https://ideas.repec.org/p/dlw/wpaper/07-06..html
   My bibliography  Save this paper

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

Author

Listed:
  • 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.
    as

    Download full text from publisher

    File URL: http://graduate.lerner.udel.edu/sites/default/files/ECON/PDFs/RePEc/dlw/WorkingPapers/2007/UDWP2007-06.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    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.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    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).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Edward J. Bird, 1996. "Repairing the safety net: Is the EITC the right patch?," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 15(1), pages 1-31.
    2. Nicole Simpson & Devin Reilly & Kartik Athreya, 2010. "The Earned Income Tax Credit: Insurance Without Disincentives?," 2010 Meeting Papers 1103, Society for Economic Dynamics.
    3. Jacob Bastian & Lance Lochner, 2022. "The Earned Income Tax Credit and Maternal Time Use: More Time Working and Less Time with Kids?," Journal of Labor Economics, University of Chicago Press, vol. 40(3), pages 573-611.
    4. Lawrence F. Katz, 1996. "Wage Subsidies for the Disadvantaged," NBER Working Papers 5679, National Bureau of Economic Research, Inc.
    5. Jacob Bastian, 2020. "The EITC and Maternal Time Use: More Time Working and Less Time with Kids?," Working Papers 2020-077, Human Capital and Economic Opportunity Working Group.
    6. Ventry, Dennis J. Jr., 2000. "The Collision of Tax and Welfare Politics: The Political History of the Earned Income Tax Credit, 1969-99," National Tax Journal, National Tax Association;National Tax Journal, vol. 53(4), pages 983-1026, December.
    7. Rebecca M. Blank & David Card & Philip K. Robins, 1999. "Financial Incentives for Increasing Work and Income Among Low- Income Families," HEW 9902002, University Library of Munich, Germany.
    8. Julien Albertini & Arthur Poirier & Anthony Terriau, 2020. "The impact of EITC on education, labor market trajectories, and inequalities," Working Papers 2036, Groupe d'Analyse et de Théorie Economique Lyon St-Étienne (GATE Lyon St-Étienne), Université de Lyon.
    9. N. Eissa & H. W. Hoynes, "undated". "The Earned Income Tax Credit and the Labor Supply of Married Couples," Institute for Research on Poverty Discussion Papers 1194-99, University of Wisconsin Institute for Research on Poverty.
    10. V. Joseph Hotz, 2003. "The Earned Income Tax Credit," NBER Chapters, in: Means-Tested Transfer Programs in the United States, pages 141-198, National Bureau of Economic Research, Inc.
    11. Laurence Seidman, 2013. "Overcoming the Fiscal Trilemma with Two Progressive Consumption Tax Supplements," Public Finance Review, , vol. 41(6), pages 824-851, November.
    12. David Neumark & William Wascher, 2000. "Using the EITC to Increase Family Earnings: New Evidence and a Comparison with the Minimum Wage," JCPR Working Papers 134, Northwestern University/University of Chicago Joint Center for Poverty Research.
    13. Steven Pressman, 2011. "Policies to Reduce Child Poverty: Chld Allowances Versus Tax Exemptions for Children," LIS Working papers 558, LIS Cross-National Data Center in Luxembourg.
    14. Dreger, Christian & Kempe, Wolfram & Kolb, Jürgen & Trabert, Lioba, 1998. "Was bringt ein Kombilohn? Eine ökonometrische Analyse der Arbeitsangebotsreaktionen von Sozialhilfeempfängern und der fiskalischen Effekte für Sozialhilfeträger (What is the use of a wages top-up? : a," Mitteilungen aus der Arbeitsmarkt- und Berufsforschung, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 31(4), pages 705-714.
    15. Chris Herbst, 2010. "The labor supply effects of child care costs and wages in the presence of subsidies and the earned income tax credit," Review of Economics of the Household, Springer, vol. 8(2), pages 199-230, June.
    16. Jacob E. Bastian, 2024. "The EITC in rural and economically distressed areas: More bang per buck?," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 31(1), pages 136-159, February.
    17. Ventry, Dennis J. Jr., 2000. "The Collision of Tax and Welfare Politics: The Political History of the Earned Income Tax Credit, 1969-99," National Tax Journal, National Tax Association, vol. 53(n. 4), pages 983-1026, December.
    18. Jungbauer-Gans, Monika & Hönisch, Petra, 1998. "Dauer geringfügiger Beschäftigungen (Duration of +marginal+ part-time jobs)," Mitteilungen aus der Arbeitsmarkt- und Berufsforschung, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 31(4), pages 697-704.
    19. Nada Eissa & Jeffrey B. Liebman, 1996. "Labor Supply Response to the Earned Income Tax Credit," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 111(2), pages 605-637.

    More about this item

    Keywords

    ;
    ;

    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

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:dlw:wpaper:07-06.. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Saul Hoffman (email available below). General contact details of provider: https://edirc.repec.org/data/deudeus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.