IDEAS home Printed from https://ideas.repec.org/a/eee/pubeco/v227y2023ics0047272723001846.html
   My bibliography  Save this article

Measuring take-up of the California EITC with state administrative data

Author

Listed:
  • Iselin, John
  • Mackay, Taylor
  • Unrath, Matthew

Abstract

The Earned Income Tax Credit (EITC) is the largest cash-based means-tested transfer program in the United States. In 2021, 31 million households received $64 billion from the federal EITC. Twenty-eight states also offer eligible taxpayers a supplement to the federal program. An estimated one-fifth of eligible households fail to claim the federal credit, but little is known about take-up of these state programs. We use administrative data from California on the population of Supplemental Nutrition Assistance Program (SNAP) recipients linked to state tax records to estimate the number of households who are eligible for California’s supplement to the federal EITC (CalEITC) but do not claim it. We find that over 400,000 households who received SNAP benefits and who were eligible for the state EITC in 2017 did not receive the credit. This includes approximately 40,000 eligible households who claimed the federal EITC but not the state credit; nearly 98,000 eligible households who filed a state tax return but did not claim the state or federal credit; and roughly 270,000 eligible households who did not file a state tax return. The corresponding take-up rate for the CalEITC among eligible SNAP-enrolled households was 54%. Altogether, these households left a total of $71 million in state EITC funds on the table. If received, these credits would have increased incomes among these households by 2.7% and increased total state EITC outlays by 20%.

Suggested Citation

  • Iselin, John & Mackay, Taylor & Unrath, Matthew, 2023. "Measuring take-up of the California EITC with state administrative data," Journal of Public Economics, Elsevier, vol. 227(C).
    • Handle: RePEc:eee:pubeco:v:227:y:2023:i:c:s0047272723001846
    DOI: 10.1016/j.jpubeco.2023.105002
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0047272723001846
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.jpubeco.2023.105002?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Hilary Hoynes & Jesse Rothstein, 2016. "Tax Policy Toward Low-Income Families," NBER Working Papers 22080, National Bureau of Economic Research, Inc.
    2. Amy Finkelstein & Matthew J Notowidigdo, 2019. "Take-Up and Targeting: Experimental Evidence from SNAP," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 134(3), pages 1505-1556.
    3. Bruce D. Meyer & Derek Wu & Grace Finley & Patrick Langetieg & Carla Medalia & Mark Payne & Alan Plumley, 2020. "The Accuracy of Tax Imputations: Estimating Tax Liabilities and Credits Using Linked Survey and Administrative Data," NBER Chapters, in: Measuring Distribution and Mobility of Income and Wealth, pages 459-498, National Bureau of Economic Research, Inc.
    4. Elizabeth Linos & Allen Prohofsky & Aparna Ramesh & Jesse Rothstein & Matthew Unrath, 2022. "Can Nudges Increase Take-Up of the EITC? Evidence from Multiple Field Experiments," American Economic Journal: Economic Policy, American Economic Association, vol. 14(4), pages 432-452, November.
    5. Maggie R. Jones & James P. Ziliak, 2022. "The Antipoverty Impact of the EITC: New Estimates from Survey and Administrative Tax Records," National Tax Journal, University of Chicago Press, vol. 75(3), pages 451-479.
    6. Maggie R. Jones, 2014. "Changes in EITC Eligibility and Participation, 2005–2009," CARRA Working Papers 2014-04, Center for Economic Studies, U.S. Census Bureau.
    7. Jeff Larrimore & Jacob Mortenson & David Splinter, 2021. "Household Incomes in Tax Data: Using Addresses to Move from Tax-Unit to Household Income Distributions," Journal of Human Resources, University of Wisconsin Press, vol. 56(2), pages 600-631.
    8. 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).
    9. Henrik Kleven, 2019. "The EITC and the Extensive Margin: A Reappraisal," NBER Working Papers 26405, National Bureau of Economic Research, Inc.
    10. David Splinter & Jeff Larrimore & Jacob Mortenson, 2017. "Whose Child Is This? Shifting of Dependents among EITC Claimants within the Same Household," National Tax Journal, National Tax Association;National Tax Journal, vol. 70(4), pages 737-758, December.
    11. Blumenthal, Marsha & Erard, Brian & Ho, Chih–Chin, 2005. "Participation and Compliance With the Earned Income Tax Credit," National Tax Journal, National Tax Association;National Tax Journal, vol. 58(2), pages 189-213, June.
    12. Maggie R. Jones & Amy B. O’Hara, 2016. "Do Doubled-Up Families Minimize Household-Level Tax Burden?," National Tax Journal, National Tax Association;National Tax Journal, vol. 69(3), pages 613-640, September.
    13. Jacob Bastian & Katherine Michelmore, 2018. "The Long-Term Impact of the Earned Income Tax Credit on Children’s Education and Employment Outcomes," Journal of Labor Economics, University of Chicago Press, vol. 36(4), pages 1127-1163.
    14. Saurabh Bhargava & Dayanand Manoli, 2015. "Psychological Frictions and the Incomplete Take-Up of Social Benefits: Evidence from an IRS Field Experiment," American Economic Review, American Economic Association, vol. 105(11), pages 3489-3529, November.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Aimee Chabot & Maximilian Hell, 2023. "Using Technology and Iterative Research to Strengthen the Social Safety Net," The ANNALS of the American Academy of Political and Social Science, , vol. 706(1), pages 256-275, March.
    2. 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.
    3. Bastian, Jacob E. & Jones, Maggie R., 2021. "Do EITC expansions pay for themselves? Effects on tax revenue and government transfers," Journal of Public Economics, Elsevier, vol. 196(C).
    4. Jonathan Meer & Joshua Witter, 2022. "Effects of the Earned Income Tax Credit for Childless Adults: A Regression Discontinuity Approach," NBER Chapters, in: Tax Policy and the Economy, Volume 37, pages 175-198, National Bureau of Economic Research, Inc.
    5. John Guyton & Kara Leibel & Day Manoli & Ankur Patel & Mark Payne & Brenda Schafer, 2023. "The Effects of EITC Correspondence Audits on Low-Income Earners," NBER Chapters, in: Tax Policy and the Economy, Volume 38, pages 163-207, National Bureau of Economic Research, Inc.
    6. Diane Whitmore Schanzenbach & Michael R. Strain, 2021. "Employment Effects of the Earned Income Tax Credit: Taking the Long View," Tax Policy and the Economy, University of Chicago Press, vol. 35(1), pages 87-129.
    7. Heather Klemick & Ann Wolverton & Bryan Parthum & Kristin Epstein & Sandra Kutzing & Sarah Armstrong, 2024. "Factors Influencing Customer Participation in a Program to Replace Lead Pipes for Drinking Water," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 87(3), pages 791-832, March.
    8. David Neumark & Katherine E. Williams, 2020. "Do State Earned Income Tax Credits Increase Participation in the Federal EITC?," Public Finance Review, , vol. 48(5), pages 579-626, September.
    9. Gallegos, Sebastian & Roseth, Benjamin & Cuesta, Ana & Sánchez, Mario, 2023. "Increasing the take-up of public health services: An at-scale experiment on digital government," Journal of Public Economics, Elsevier, vol. 227(C).
    10. Otto Lenhart, 2023. "The earned income tax credit and food insecurity," American Journal of Agricultural Economics, John Wiley & Sons, vol. 105(5), pages 1543-1570, October.
    11. Nyman, Pär & Aggeborn, Linuz & Ahlskog, Rafael, 2023. "Filling in the blanks: How does information about the Swedish EITC affect labour supply?," Labour Economics, Elsevier, vol. 85(C).
    12. Jacob E. Bastian, 2024. "The EITC in rural and economically distressed areas: More bang per buck?," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 31(1), pages 136-159, February.
    13. Achim Ahrens & Alessandra Stampi-Bombelli & Selina Kurer & Dominik Hangartner, 2023. "Optimal multi-action treatment allocation: A two-phase field experiment to boost immigrant naturalization," Papers 2305.00545, arXiv.org, revised Feb 2024.
    14. Andreas R. Kostøl & Andreas S. Myhre, 2021. "Labor Supply Responses to Learning the Tax and Benefit Schedule," American Economic Review, American Economic Association, vol. 111(11), pages 3733-3766, November.
    15. Tatiana Homonoff & Jason Somerville, 2021. "Program Recertification Costs: Evidence from SNAP," American Economic Journal: Economic Policy, American Economic Association, vol. 13(4), pages 271-298, November.
    16. Bastian, Jacob E. & Black, Dan A., 2024. "Relaxing financial constraints with tax credits and migrating out of rural and distressed America," Journal of Public Economics, Elsevier, vol. 234(C).
    17. Braga, Breno & Blavin, Fredric & Gangopadhyaya, Anuj, 2020. "The long-term effects of childhood exposure to the earned income tax credit on health outcomes," Journal of Public Economics, Elsevier, vol. 190(C).
    18. C. Yiwei Zhang & Jeffrey Hemmeter & Judd B. Kessler & Robert D. Metcalfe & Robert Weathers, 2023. "Nudging Timely Wage Reporting: Field Experimental Evidence from the U.S. Supplemental Security Income Program," Management Science, INFORMS, vol. 69(3), pages 1341-1353, March.
    19. Bruce D. Meyer & Derek Wu & Grace Finley & Patrick Langetieg & Carla Medalia & Mark Payne & Alan Plumley, 2020. "The Accuracy of Tax Imputations: Estimating Tax Liabilities and Credits Using Linked Survey and Administrative Data," NBER Chapters, in: Measuring Distribution and Mobility of Income and Wealth, pages 459-498, National Bureau of Economic Research, Inc.
    20. Nicardo S. McInnis & Katherine Michelmore & Natasha Pilkauskas, 2023. "The Intergenerational Transmission of Poverty and Public Assistance: Evidence from the Earned Income Tax Credit," NBER Working Papers 31429, National Bureau of Economic Research, Inc.

    More about this item

    Keywords

    Administrative data; Earned income tax credit; Social safety net; Take-up;
    All these keywords.

    JEL classification:

    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:pubeco:v:227:y:2023:i:c:s0047272723001846. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/inca/505578 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.