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An Earned Income Tax Credit that works for singles: Final impact findings from the Paycheck Plus Demonstration in Atlanta (Yang et al., 2022)

Review Guidelines

Absence of conflict of interest.

Citation

Yang, E., Bernardi, A., Metz, R., Miller, C., Katz, L. F., & Isen, A. (2022). An Earned Income Tax Credit that works for singles: Final impact findings from the Paycheck Plus Demonstration in Atlanta. OPRE Report 2022-54. Washington, DC: Office of Planning, Research, and Evaluation, Administration for Children and Families, U.S. Department of Health and Human Services. https://www.acf.hhs.gov/opre/report/earned-income-tax-credit-works-singles

Highlights

  • The study's objective was to examine the impact of Paycheck Plus in Atlanta on earnings and employment. Paycheck Plus is part of the Subsidized and Transitional Employment Demonstration (STED), a large-scale research demonstration generating rigorous evidence on the effectiveness of subsidized employment models. 
  • The study was a randomized controlled trial. Using state and federal administrative data, the authors conducted statistical models to compare the outcomes of participants who were randomly assigned to Paycheck Plus and participants in the control group. 
  • The study found a statistically significant relationship between Paycheck Plus and after-bonus earnings (earnings after accounting for taxes and the Paycheck Plus bonus) in the program’s first year. 
  • The quality of causal evidence presented in this report is high because it was based on a well-implemented randomized controlled trial. This means we are confident that the estimated effects are attributable to Paycheck Plus, not other factors.

Intervention Examined

Paycheck Plus

Features of the Intervention

The Earned Income Tax Credit (EITC) program provides a refundable tax credit to eligible workers with low incomes. Typically, the EITC provides a small tax refund to eligible single workers without dependent children. Paycheck Plus was a demonstration to test the effects of expanding the EITC for single workers without dependent children. Paycheck Plus was implemented in New York City and Atlanta, GA. Paycheck Plus provided a tax credit to eligible workers of up to $2,000 and extended benefits to eligible workers earning up to $30,000 per year, which was twice the maximum income limit for the federal EITC.

Features of the Study

The study used a randomized controlled trial to examine the impacts of Paycheck Plus on earnings and employment. Participants were randomly assigned to either a treatment group eligible for Paycheck Plus or a control group not eligible for Paycheck Plus but eligible for existing tax credits. Participants were followed for three years, starting in the 2017 tax season and running through 2019.  

The study recruited 4,000 participants in the Atlanta, Georgia metro area. To be eligible, participants had to be unmarried, have a valid Social Security Number (SSN), be aged 21 to 64, have earned less than $30,000 in the previous year, have no dependent children to claim on their taxes, and were not receiving or applying for Supplemental Security Income or Social Security Disability Insurance. Most participants were Non-Hispanic Black (86%). About six in ten were male (61%) and were older than 35 (60%). Most participants had at least a high school diploma (86%), and most were paid less than $18,000 in the previous year (80%). About four in ten were noncustodial parents.  

Data sources included a baseline survey, Georgia Department of Labor unemployment insurance wage records, Internal Revenue Service tax records, and Georgia Department of Human Services Division of Child Support Services child support records. The authors used statistical models to compare the outcomes of the treatment and control group members.

Findings

Earnings and Wages 

  • The study found that Paycheck Plus had a significant impact on after-bonus earnings (i.e., earnings after accounting for taxes and the Paycheck Plus bonus) in the program’s first year, but not in the second and third years.  
  • The study found that Paycheck Plus had no significant impacts on earnings in any of the program’s three years. 

Employment 

  • The study found that Paycheck Plus had no significant impacts on employment in any of the program’s three years.

Considerations for Interpreting the Findings

The authors described some challenges with program implementation. Due to their dispersed geographical location across multiple counties, participants faced longer travel distances and fewer public transportation options for claiming their Paycheck Plus bonus payments in person, which was a program requirement. Additionally, they had fewer connections to the tax system and free tax preparation since the United Way of Greater Atlanta, the program’s implementation partner, was less well-known than its New York counterpart as a tax assistance provider. (The demonstration was also run in New York City from 2014 through 2017.) In the program’s third year, United Way also reduced its tax assistance center operations which further restricted access to free tax preparation sites for Atlanta participants.

Causal Evidence Rating

The quality of causal evidence presented in this study is high because it was based on a well-implemented randomized controlled trial. This means we are confident that the estimated effects are attributable to Paycheck Plus, and not to other factors.

Reviewed by CLEAR

December 2024