State of the EITC: Assessing the Impact of State EITCs on State Poverty Rates, 1980-2014

Title

State of the EITC: Assessing the Impact of State EITCs on State Poverty Rates, 1980-2014

Published Date

2020-04-29

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Abstract

Purpose: Though they are an increasingly popular way for states to try to reduce poverty and increase labor force participation, there is limited empirical evidence as to the effectiveness of state Earned Income Tax Credits in reducing poverty rates. The studies that do address this issue display contradictory findings and are increasingly outdated relative the current era of state EITCs. My study aims to provide further evidence on the impact of state EITCs on poverty rates. Research Question: How do state Earned Income Tax Credits impact state official and supplemental poverty rates relative to states without an EITC? Background: The federal Earned Income Tax Credit is a tax credit for low-income individuals who have earned income through employment, and is one of the most lauded anti-poverty programs by people across the political spectrum. States also have the ability to create their own additional EITC programs. While there is ample research looking at the federal EITC’s effect on poverty, less is known about state EITCs. In addition, research that does exist on state EITCs’ impact on poverty often displays contradictory findings. While some studies find that state EITCs reduce pre-tax poverty by increasing labor market participation, others find that they increase pre-tax poverty by decreasing labor market participation or reducing hourly wages.

Description

Professional paper for the fulfillment of the Master of Public Policy degree.

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Tuttle, Cody R. (2020). State of the EITC: Assessing the Impact of State EITCs on State Poverty Rates, 1980-2014. Retrieved from the University Digital Conservancy, https://hdl.handle.net/11299/214086.

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