Claims about Earned Income Tax Credit

The EITC increases the labor supply of mothers, which leads to increases in payroll and sales taxes paid.

The EITC decreases dependence on government transfer spending.

Evaluated over a one-year period, the net EITC cost is only 17 percent of the $70 billion annual budgetary cost.

Evaluated over a longer-time horizon, the net EITC cost is lower and perhaps zero.

The 2009 EITC expansion continued to increase maternal labor supply and earnings.

Here is the forthcoming Journal of Public Economics paper, by Jacob E. Bastian and Maggie R. Jones, via the excellent Kevin Lewis.


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