The Persistent Reduction in Poverty from Filing a Tax Return†

The Persistent Reduction in Poverty from Filing a Tax Return† AbstractLow-income households not required to file often fail to receive benefits provided through the tax code. In 2008, the US government made people with at least $3,000 in earnings eligible for a stimulus payment if they filed a tax return. Using eligibility for this credit as an instrument for filing, we find with administrative data that filing reduces the probability of living in poverty in future years, which is a result of increases in EITC claiming, workforce attachment, and earnings. These results demonstrate that temporary incentives to participate in the tax system have persistent real effects on economic activity and poverty. (JEL H24, I32, I38) http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png American Economic Journal: Economic Policy American Economic Association

The Persistent Reduction in Poverty from Filing a Tax Return†

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Publisher
American Economic Association
Copyright
Copyright © 2017 © American Economic Association
ISSN
1945-7731
D.O.I.
10.1257/pol.20150486
Publisher site
See Article on Publisher Site

Abstract

AbstractLow-income households not required to file often fail to receive benefits provided through the tax code. In 2008, the US government made people with at least $3,000 in earnings eligible for a stimulus payment if they filed a tax return. Using eligibility for this credit as an instrument for filing, we find with administrative data that filing reduces the probability of living in poverty in future years, which is a result of increases in EITC claiming, workforce attachment, and earnings. These results demonstrate that temporary incentives to participate in the tax system have persistent real effects on economic activity and poverty. (JEL H24, I32, I38)

Journal

American Economic Journal: Economic PolicyAmerican Economic Association

Published: Nov 1, 2017

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