Saturday, July 23, 2005
Marsha Blumenthal (University of St. Thomas), Brian Erard (B. Erard & Associates, Reston, VA) & Chih–Chin Ho (National Taiwan University) have published Participation and Compliance with the Earned Income Tax Credit, 58 National Tax Journal 189-213 (June 2005). Here is the abstract:
We explore participation and compliance with the Earned Income Tax Credit (EITC) using a unique administrative data source. Among eligible households with a legal filing requirement, we find that EITC participation is high and that it responded positively to the rise in real benefit amounts during the 1990s. Although participation has also improved among households with no legal filing obligation, it remains rather low and may actually be inferior to participation within more traditional welfare programs. Compliance with the EITC has been a persistent problem. We find that erroneous claims are much more common among households who satisfy some (but not all) program requirements. We find no evidence of a deterrent role by tax practitioners with respect to improper claims.