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Research

Does D.C.’s Earned-Income Tax Credit Raise Likelihood for Low-Income Workers to Escape Poverty?

Earned-Income Tax Credit

A recent working paper by SPA Assistant Professor Bradley Hardy, Daniel Muhammad, and SPA doctoral candidate Rhucha Samudra found that Washington D.C.’s Earned Income Tax Credit (EITC) raises the likelihood for low-income workers to escape poverty. D.C. provides the largest supplemental EITC in the nation, matching 40% of the federal tax credit offered to low-income workers. The study analyzed the effects of the local EITC, ultimately finding that it, combined with the federal EITC, can be an effective antipoverty intervention for the working poor – up to a 9% likelihood of raising low-income workers above the poverty line – with effects that persist for at least 2 years. The working paper, entitled “The Effect of Earned Income Tax Credit in the District of Columbia on Poverty and Income Dynamics,” was released as part of the W.E. Upjohn Institute for Employment Research Working Papers series.

The working paper is part of Hardy’s ongoing research on economic mobility, exposure to economic risk, and U.S. social welfare policies . In Fall 2013, Hardy began examining public policies in D.C. via a research collaboration with the D.C. Government Office of Revenue Analysis (ORA). The effort has paired Hardy with ORA economists and researchers within the D.C. Office of the Chief Financial Officer. The resulting projects have reached across disciplines at AU to help develop doctoral scholars, such as Samudra (SPA) and CAS Economics doctoral student Britni Wilcher, who conducted research this past summer on earnings and income growth in the District.