Category: Tax
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Are Income Tax Breaks for Seniors Good for State Economic Growth? In this brief, authors Ben Brewer, Karen Conway, and Jon Rork discuss the findings of their recently published study that investigates, directly, the impact on state economic growth of expanding income tax breaks for seniors.
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Income, Low Income, Seniors, Tax | Publication | |
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Child Tax Credit Expansion Increases Number of Families Eligible for a Refund The analysis shows that more than 500,000 rural families, or almost 9 percent of rural families, will become newly eligible for the Child Tax Credit under the expansion included in the American Recovery and Reinvestment Act. Within these families are an estimated 900,000 rural children. The proportion of urban families benefiting from the expanded Child Tax Credit is slightly lower than in rural areas, but only 5 percent of suburban families are newly eligible for the credit.
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Vulnerable Families Research Program | Children, Employment, Rural, Safety Net, Tax, Urban | Publication |
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EITC is Vital for Working-Poor Families in Rural America In the 2004 tax year, tax filers claimed almost $40 billion through the Earned Income Tax Credit (EITC), making the EITC one of the largest federal programs that provides cash supports to low-income working families in the United States. The EITC is especially important to rural families throughout the United States. Among poor and near-poor families, those in rural areas are more likely to be working, and they are more likely to be working in low-wage jobs.
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Vulnerable Families Research Program | Employment, Poverty, Rural, Safety Net, Tax | Publication |
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Federal EITC Kept 2 Percent of the Population Out of Poverty This brief documents the proportion of Americans who would have been poor absent the Earned Income Tax Credit (EITC), all else being equal, across 2010–2014. We examine Supplemental Poverty Measure (SPM) rates as well as hypothetical increases in the rates of SPM poverty in the absence of federal EITC benefits. It is important to note that we do not model behavioral changes that might result from the removal of EITC benefits, so the analyses presented here are a simplified representation of such a hypothetical scenario. The SPM is an obvious choice for this analysis because unlike the Official Poverty Measure (OPM), which only accounts for before-tax cash income, the SPM also considers in-kind benefits, tax credits, and out-of-pocket work and medical expenses when estimating resources. We present SPM rates for all individuals (Table 1) as well as for children only (Table 2), analyzing trends across regions, metropolitan status, and by state. Importantly, geographic differences in the cost of housing are accounted for in the SPM rates, and consequently the analyses presented here give a more accurate sense of the poverty reducing impact of EITC benefits.1
Data
This brief consists of a pooled sample using the Current Population Survey (CPS) Annual Social and Economic Supplement (ASEC) between the years of 2011–2015. The CPS ASEC is sponsored by the Bureau of Labor Statistics (BLS), Census Bureau, and the Department of Health and Human Services (HHS), providing annual income, migration, benefits, and insurance information for a nationally representative sample of Americans. The CPS uses a tax model calculator to simulate tax income instead of collecting tax information directly from respondents. Payroll taxes for individuals with earned income are simulated first, and then tax-filing units are estimated based on marital status and household relationship structure.
Once the potential tax-filing units have been determined, state and federal taxes and credits are simulated for each unit (for more information, see https://www.census.gov/hhes/www/income/publications/oharataxmodel.pdf). Because tax credits are simulated, it is possible that some families who receive the EITC may not be included and others who are not eligible for EITC benefits (for example, undocumented immigrants) may be assigned a value due to errors in the tax model.
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Vulnerable Families Research Program | Children, Poverty, Safety Net, Tax | Publication |
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Forty-three Percent of Eligible Rural Families Can Claim a Larger Credit with EITC Expansion This policy brief on the changes to the Earned Income Tax Credit in the ARRA also shows that families with three or more children and married couples will receive an increased refund under these new EITC rules for tax years 2009 and 2010. Many families in urban and suburban communities will also see increased benefits under these new provisions.
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Vulnerable Families Research Program | Employment, Family, Rural, Safety Net, Tax | Publication |
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Government Spending Across the World In this brief, authors Michael Ettlinger, Jordan Hensley, and Julia Vieira analyze how much the governments of different countries spend, and on what, to illuminate the range of fiscal policy options available and provide a basis for determining which approaches work best.
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Education, Safety Net, Tax | Publication | |
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Over 3 Million Low-Income Children in Rural Areas Face Cut in Child Tax Credit if Recovery Act Improvement Expires According to this new research, at the end of 2010, the Child Tax Credit improvements that were included in the 2009 American Recovery and Reinvestment Act will expire if Congress does not extend them. If this happens, low-income working families across America will be affected.
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Vulnerable Families Research Program | Children, Poverty, Rural, Safety Net, Tax | Publication |
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Proposed EITC Expansion Would Increase Eligibility and Dollars for Rural and Urban “Childless” Workers This brief uses data from the 2013 Annual Social and Economic Supplement to the Current Population Survey to examine how President Obama’s proposed expanded eligibility and higher credit values might affect tax filers in both rural and urban America.
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Vulnerable Families Research Program | Children, Employment, Rural, Safety Net, Tax, Urban | Publication |
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Senior Tax Breaks on the Move—but Are Seniors Actually Moving? Every state in the United States with an income tax offers some kind of tax break to its older citizens. These breaks are often sizable, resulting in an elderly household owing substantially less in income taxes than a non-elderly household with the same income. In Alabama, Georgia, Hawaii, Illinois, Michigan, Mississippi, and Pennsylvania, married elderly households can have incomes well over $100,000 and not owe any state income taxes at all. Such tax breaks come at considerable cost to state coffers, a cost that is almost certain to grow as the elderly population grows in both size and economic status. Yet there is little evidence that these tax breaks are providing states with any economic benefit, and the savings are skewed toward those in little need of public support. These tax breaks appear to be expanding. Since the beginning of 2017, legislators in at least thirteen states have proposed or established significant expansions: Laws eliminating all taxes on Social Security income have been proposed in Vermont, Montana, and Minnesota, with projected annual budget costs of $30 million, $75 million, and approximately $425 million, respectively. Laws that would go further and exempt all pension income have been proposed in Connecticut and Nebraska. In January, Arkansas began exempting all military pension income from taxation, and similar laws are being considered in at least six other states. After much debate last year, New Jersey enacted legislation doubling the $20,000 exemption on retirement income in 2017 and increasing it to $100,000 by 2020.
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Vulnerable Families Research Program | Demography, Seniors, Tax | Publication |
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Seventy-eight Percent of Working Rural Families to Receive Full Making Work Pay Tax Credit The Making Work Pay Tax Credit provides eligible U.S. workers with additional money in each paycheck throughout the year. The fact sheet shows that 78 percent of rural working families will receive the full amount of the credit, while an additional 10 percent of families will receive a partial credit due to low earnings or high earnings. These tax credits, along with the expansion to the Child Tax Credit, are an important financial boost to families in rural America, particularly low-income working families.
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Vulnerable Families Research Program | Employment, Family, Rural, Safety Net, Tax | Publication |
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Share of Childless Adults Eligible for EITC Triples Under American Rescue Plan In this fact sheet, author Jess Carson explores how changes to the Earned Income Tax Credit in 2021 affect childless tax filers. Findings show that the share of childless adults who can claim a credit has tripled under the new provisions, and that the biggest driver of widened access is lowering the minimum age for eligibility.
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Center for Social Policy in Practice, COVID-19 | COVID-19, Income, Low Income, Poverty, Safety Net, Tax, Wages | Publication |
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Share of Tax Filers Claiming EITC Increases Across States and Place Types Between 2007 and 2010 In this brief, Authors Beth Mattingly and Elizabeth Kneebone use Internal Revenue Service tax filing data to show that the share of tax returns claiming the Earned Income Tax Credit (EITC) increased between 2007 and 2010, as did the size of the average credit claimed and the number of EITC filers benefitting from the refundable portion of the Child Tax Credit (the Additional Child Tax Credit,
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Vulnerable Families Research Program | Safety Net, Tax | Publication |
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State EITC Programs Provide Important Relief to Families in Need The federal Earned Income Tax Credit (EITC) is one of the largest anti-poverty programs in the nation, offering tax credits to low- and moderate-earning families.1 The amount of EITC benefits varies by earnings and the number of dependent children in a family, with considerably more generous benefits going to families with children. In addition to the federal EITC, as of 2015, twenty-six states and the District of Columbia provided additional EITC dollars.2 Most state EITCs are generally structured such that they offer credits equal to a proportion of the federal EITC, varying from 3.5 percent in Louisiana to 40 percent in Washington, DC. This brief documents the estimated effects of state EITC benefits on rates of poverty in 2010–2014 using the Current Population Survey (CPS) Annual Social and Economic Supplement (ASEC). First, we examine Supplemental Poverty Measure (SPM) rates and average EITC benefits across states with a fully refundable EITC between 2010 and 2014, and estimate how much higher poverty rates would have been in the absence of the state EITC. Next, we analyze how trends in poverty and state EITC benefits vary by race, marital status, metropolitan status, and region among these states. Finally, we project hypothetical differences in poverty rates for non-EITC states had they adopted EITCs of various generosities over this same time period.
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Vulnerable Families Research Program | Poverty, Safety Net, Tax | Publication |
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The Interaction Between the Minimum Wage and the Federal EITC Increases in the minimum wage are widely assumed to be beneficial for low-income workers, but it is important to consider the effect an increase might have on eligibility for other benefits, particularly the federal Earned Income Tax Credit (EITC). This fact sheet examines the interaction between the minimum wage and the EITC to determine whether a minimum wage increase would produce gains in the sum of earnings plus EITC dollars for low-income workers.1
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Vulnerable Families Research Program | Employment, Income, Safety Net, Tax, Wages | Publication |
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Transportation and Taxes As in the United States as a whole, New Hampshire’s transportation infrastructure is in serious need of upgrading and maintenance. Addressing the problem will require substantial public investment, which will in turn require public awareness of infrastructure challenges and public understanding of the means to address them.
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Community, Environment, and Climate Change, New Hampshire | Infrastructure, New Hampshire, Tax | Publication |