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.
CitationRamnath, Shanthi P., and Patricia K. Tong. 2017. "The Persistent Reduction in Poverty from Filing a Tax Return." American Economic Journal: Economic Policy, 9 (4): 367-94. DOI: 10.1257/pol.20150486
- H24 Personal Income and Other Nonbusiness Taxes and Subsidies; includes inheritance and gift taxes
- I32 Measurement and Analysis of Poverty
- I38 Welfare, Well-Being, and Poverty: Government Programs; Provision and Effects of Welfare Programs