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Does Informing Employees about Tax Benefits Increase Take-Up? Evidence from EITC Notification Laws

Taylor Cranor, Jacob Goldin, and Sarah Kotb

Abstract:

Incomplete take-up of the Earned Income Tax Credit (EITC) is a source of persistent policy concern, with an estimated one-fifth of eligible households failing to claim the credit. To promote take-up, a growing number of jurisdictions require employers to provide EITC information to employees. We study the effect of these requirements, linking state and time variation in the adoption of the notification laws to administrative tax data. Our preferred specification yields precise null effects on EITC claiming, filing behavior, and labor force participation. The results cast doubt on the effectiveness of the notice requirements as implemented and suggest further research into other avenues for increasing tax benefit take-up.

Citation

Taylor Cranor, Jacob Goldin, and Sarah Kotb (2019), Does Informing Employees about Tax Benefits Increase Take-Up? Evidence from EITC Notification Laws , National Tax Journal, 72:2, pp. 397-434

DOI: dx.doi.org/10.17310/ntj.2019.2.04

Additional Materials

Online appendix