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The Persistent Reduction in Poverty from Filing a Tax Return

Author

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  • Shanthi P. Ramnath
  • Patricia K. Tong

Abstract

Low-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.

Suggested Citation

  • Shanthi P. Ramnath & Patricia K. Tong, 2017. "The Persistent Reduction in Poverty from Filing a Tax Return," American Economic Journal: Economic Policy, American Economic Association, vol. 9(4), pages 367-394, November.
    • Handle: RePEc:aea:aejpol:v:9:y:2017:i:4:p:367-94
    Note: DOI: 10.1257/pol.20150486
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    Citations

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    Cited by:

    1. Ariel J. Binder & Caroline Walker & Jonathan Eggleston & Marta Murray-Close, 2022. "Race and Mobility in U.S. Marriage Markets: Quantifying the Role of Segregation," Working Papers 22-59, Center for Economic Studies, U.S. Census Bureau.
    2. Bastani, Spencer & Giebe, Thomas & Miao, Chizheng, 2020. "Ethnicity and tax filing behavior," Journal of Urban Economics, Elsevier, vol. 116(C).
    3. Rosenqvist, Olof & Selin, Håkan, 2023. "Explaining benefit take-up behavior – the role of incentives and habits," Working Paper Series 2023:24, IFAU - Institute for Evaluation of Labour Market and Education Policy.
    4. Goldin, Jacob & Homonoff, Tatiana & Javaid, Rizwan & Schafer, Brenda, 2022. "Tax filing and take-up: Experimental evidence on tax preparation outreach and benefit claiming," Journal of Public Economics, Elsevier, vol. 206(C).

    More about this item

    JEL classification:

    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs

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