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Income Mobility and the Earned Income Tax Credit
Author(s) -
Horowitz John B.
Publication year - 2002
Publication title -
economic inquiry
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.823
H-Index - 72
eISSN - 1465-7295
pISSN - 0095-2583
DOI - 10.1093/ei/40.3.334
Subject(s) - earned income tax credit , earnings , economics , labour economics , tax credit , demographic economics , public economics , finance
Households who work full‐time at minimum wage jobs earn more than the phasein range of the Earned Income Tax Credit (EITC). This means that the EITC mainly acts as a negative income tax. However, most families are eligible to receive the EITC for a relatively short time. Seventy‐four percent of new EITC families will lose their eligibility in two years or less. Sixty‐one percent of families already on the EITC will lose their eligibility in three years or less. EITC families are much more mobile than AFDC families. The main reason that families gain or lose EITC eligibility is changes in earnings.