Earned Income Tax Credit & Ohio...exploring the Brookings info on EITC.

I ran across this great site over at the Brookings Institution web page on the Earned Income Tax Credit.

 

The EITC is sort of a indirect subsidy to the working poor (or lower income workers who are above the poverty line).  Here is a wiki article on it

 

The United States federal Earned Income Tax Credit (EITC) is a refundable tax credit that reduces or eliminates the taxes that low-income working people pay (such as payroll taxes) and also frequently operates as a wage subsidy for low-income workers. Enacted in 1975, the then very small EITC was expanded in 1986, 1990, 1993, and 2001 with each major tax bill, regardless of whether the tax bill in general raised taxes (1990), lowered taxes (2001), or eliminated other deductions and credits (1986). Today, the EITC is one of the largest anti-poverty tools in the United States (despite the fact that income measures, including the poverty rate, generally do not account for the credit), and enjoys broad bipartisan support.

 

Wiki on EITC

 

 

The Brookings page has a lot of neat interactive features where you run queries and download various kinds of tax info by zip and incorporated town, in various levels of detail, as well as some maps. 

 

The Brookings page is here

 

So, I went and looked up Ohio, and they had this map showing EITC filers as a % of all tax filers by zip, which is a good proxy for the number of low-wage or low-income workers in a geographical area (or at least a measure of participation…about 80% who are eligible for the EITC claim the credit)

 

 

Then, blowing up the three big citys and their closer suburbs

 

…..

 

 

 

 

 

Then, thinking that this works in reverse…the less EITC % of all filers, the more affluent an area is, as fewer people qualify for this credit.  Looking at SW Ohio, one can see regions of relative affluence or fewer low-income workers, including a large region between Dayton and Cincinnati, and to the east of these citys somewhat

 

 

Actually using the numbers in the interactive feature, and generating some graphs to identify suburban areas of Dayton (a set of incorporated suburbs, not townships or such as the database doesn’t have that), to see where the low income workers are (using EITC filing % as a proxy for this), and what suburbs might be in decline, seeing an increase in these types of filing. 

 

 

And it is interesting how certain suburbs seem to cluster together, and inserting some trend lines to see if these clusters continue….

 

 

 

Ranking the suburbs in various ways yields three of interest..….

 

 

 

Then , curious to see how many people are actually filing, and whether this number is changing….and it is.

 

 

 

 

 

One can speculate what that decline in total number of filers is about…either people are moving out, on a pension, dead, or on some form of assistance like TANF.  A declining number of filers and an increasing number of EITC claimants could mean a smaller and poorer population.  A stable number of filers and rising EITC claimants could mean the number of employed is stable, but making less.

 

The Brookings site had this “one pager” on Dayton:

 

 

 

Dayton, OH

This one-pager highlights key trends among low-income taxpayers in the city and

suburbs of Dayton between tax years 2000 and 2003. Chief among the tax provisions

relevant to these taxpayers is the Earned Income Tax Credit (EITC), a wage

supplement for families with children who have incomes under roughly $35,000, and

childless workers who have incomes under roughly $11,000.

 

• In 2003, 17,005 Dayton residents received the EITC. That figure was up 3.7 percent

from 2000.

 

• In 2003, 26.3 percent of Dayton taxpayers received the EITC, ranking Dayton 27th

among 122 large cities studied. That proportion increased from 23.0 percent in

2000, the 12th largest rise among the 122 large cities.

 

• In 2003, 27.2 percent of EITC recipients in Dayton lived in high-working-poverty ZIP

codes, where at least 40 percent of residents received the EITC. That was up from

10.7 percent in 2000, suggesting that Dayton’s working poverty became more

geographically concentrated in the 2000-2003 period.

 

• In Dayton’s suburbs, the number of taxpayers earning the EITC climbed to 39,458 in

2003, up 22.5 percent from the 2000 level. The proportion of suburban filers

receiving the credit grew from 9.4 percent to 11.7 percent during that time.

• Dayton’s low-income workers and families received roughly $31 million from the

EITC in 2003, an average of $1,821 per filer.

 

• In 2003, the majority—66.7 percent—of Dayton’s EITC recipients (11,339 in total)

paid a commercial tax preparer to file their tax returns and claim the credit, ranking

Dayton 86th among the 122 large cities studied. That proportion was up from 59.9

percent in 2000, the 37th largest rise among the cities over that period. Low-income

taxpayers typically spend in excess of $100 to have their tax returns prepared and

filed by a commercial preparer.

 

• Meanwhile, just 1.8 percent of Dayton’s EITC earners ( 310 in total) received

assistance from a volunteer return preparation program to get their 2003 tax return

completed and filed for free. That was above the nationwide average of 1.5 percent.

 

• Though research suggests that roughly 20 percent of EITC-eligible families pay for

child care, only 5.6 percent of Dayton’s EITC recipients claimed the Child and

Dependent Care Tax Credit (CDCTC) to offset their child care expenses. Dayton

ranked number 105 among 122 large cities on this measure. Relatively few EITC

earners can make use of the CDCTC because, unlike the EITC, parents must have

an income tax liability to derive any benefit from it.