TaxProf Blog

Editor: Paul L. Caron, Dean
Pepperdine University School of Law

Thursday, January 25, 2018

Goldin Presents Complexity And Take-up Of The Earned Income Tax Credit Today At UCLA

Goldin (2017)Jacob Goldin (Stanford) presents Complexity and Take-up of the Earned Income Tax Credit at UCLA today as part of its Tax Policy and Public Finance Colloquium Series hosted by Jason Oh and Kirk Stark:

Tax benefits like the Earned Income Tax Credit (EITC) represent an important source of income to their recipients, but millions of those who are eligible to claim tax benefits fail to do so. One possible explanation is that the rules governing most tax benefits are extraordinarily complex. I consider efforts to increase tax benefit take-up in light of this complexity. A key fact in thinking about this issue is that the vast majority of tax filers today prepare their taxes with assisted preparation methods (APMs) like software or professional assistance. Because APMs eliminate most of the barriers to claiming tax benefits for which one is eligible, I ague that efforts to increase benefit take-up should focus on inducing benefit-eligible individuals to file a tax return using an APM. In contrast, efforts aimed at increasing awareness of a benefit (of the type widely employed by governments and nonprofits) are less likely to be successful, except to the extent they themselves induce an increase in tax filing.

Tax reforms that appear unrelated to the benefit may dramatically affect benefit take-up rates by altering tax filing incentives. I illustrate these arguments in the context of the EITC, drawing on new statistics and recent empirical work to support my claims.

http://taxprof.typepad.com/taxprof_blog/2018/01/goldin-presents-complexity-and-take-up-of-the-earned-income-tax-credit-today-at-ucla.html

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Comments

As I recall, the idea of the EITC was to give back to low-income people the social security tax they paid. Maybe it would be better just to stop deducting FISA from wages of people who had low incomes in the previous year, with teh requirement that they pay it in their tax return if the current year has raised their income to a high enough level. That would get rid of the fraud.

Posted by: Eric Rasmusen | Jan 26, 2018 8:14:35 AM