Tax Code Knowledge and Behavioral Responses Among EITC Recipients: Policy Insights from Qualitative Data

Journal of Policy Analysis and ManagementVolume 33, Issue 2 p. 413-439 Special Symposium on Qualitative and Mixed-Methods for Policy Analysis Tax Code Knowledge and Behavioral Responses Among EITC Recipients: Policy Insights from Qualitative Data Katharine Edin, Katharine Edin Guest EditorSearch for more papers by this authorLaura Tach, Laura TachSearch for more papers by this authorSarah Halpern-Meekin, Sarah Halpern-MeekinSearch for more papers by this author Katharine Edin, Katharine Edin Guest EditorSearch for more papers by this authorLaura Tach, Laura TachSearch for more papers by this authorSarah Halpern-Meekin, Sarah Halpern-MeekinSearch for more papers by this author First published: 13 December 2013 https://doi.org/10.1002/pam.21739Citations: 22Read the full textAboutPDF ToolsRequest permissionExport citationAdd to favoritesTrack citation ShareShare Give accessShare full text accessShare full-text accessPlease review our Terms and Conditions of Use and check box below to share full-text version of article.I have read and accept the Wiley Online Library Terms and Conditions of UseShareable LinkUse the link below to share a full-text version of this article with your friends and colleagues. Learn more.Copy URL Share a linkShare onFacebookTwitterLinked InRedditWechat Abstract We build on the robust quantitative literature on behavioral responses to the Earned Income Tax Credit (EITC) by using in-depth qualitative interviews with 115 EITC recipients to examine how they understand and respond to its incentive structures regarding earnings, marriage, and childbearing. We find that respondents consider their tax refund as a whole, without differentiating the portion from the EITC; as a result, they cannot predict how their EITC refund would change if they altered their labor supply or marital status. Incentives for childbearing are better understood, but are not specific to the EITC; rather, parents respond to a combination of tax deductions and credits as a whole. Respondents would like to maximize their refunds, but most cannot or would not alter their behavior due to structural constraints they face in the labor and marriage markets. Rather than adjust work hours, defer marriage, or have additional children, respondents exhibit a different type of behavioral response to the incentive structure of the EITC: They alter their tax filing status in order to maximize their refunds. They routinely claim zero exemptions and deductions on their W-4s, file their tax returns as head of household rather than as married, and divide children among the tax returns of multiple caregivers. Although some of these behaviors qualify as tax noncompliance, they emerge because the intricacies of the tax code conflict with the complexity and fluidity of finances and family life in low-income households. Citing Literature Volume33, Issue2Spring 2014Pages 413-439 RelatedInformation