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The Value of Proposed Earned Income Tax Credits to the Office of Child Support Enforcement's Caseload: A Comparison and Recommendations
Author(s) -
Coan James
Publication year - 2008
Publication title -
politics and policy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.259
H-Index - 23
eISSN - 1747-1346
pISSN - 1555-5623
DOI - 10.1111/j.1747-1346.2008.00136.x
Subject(s) - arrears , earned income tax credit , child support , payment , income support , enforcement , tax credit , moral hazard , value (mathematics) , public economics , income tax , economics , low income , actuarial science , business , demographic economics , labour economics , finance , political science , incentive , law , microeconomics , machine learning , computer science , macroeconomics
Child support is a successful program that gives financial support to children from low‐income households who do not live with both biological parents. However, requiring the absent noncustodial parent (NCP)—the father in over 80 percent of cases—to pay child support leads to a moral hazard that the NCP may impoverish himself when helping his child or children. To overcome this drawback, New York and the District of Columbia have implemented noncustodial earned income tax credits (NC‐EITC) that award tax rebates to NCPs who fully pay their child support. This article compares the New York NC‐EITC with two other less targeted and, likely, more expensive proposals that increase the EITC for all low‐income individuals without dependents regardless of whether they have children. Using a variety of metrics, the article concludes that if the goal of these proposals is to prevent NCPs from impoverishing themselves when paying child support, they all accomplish that mission similarly well. Only a small group of NCPs who do not have past‐due payments can benefit from any of the proposals. A policy proposal to help NCPs escape impoverishment must find methods to reduce the prevalence and magnitude of arrears in addition to proposing an expanded EITC.