Boosting the Earned Income Tax Credit for Single Workers Increases After-Bonus Income, Work Rates, and Child Support Payments — and Reduces Severe Poverty

Contact: John Hutchins, MDRC, 212-340-8604, [email protected][1]

(Washington, DC, September 25, 2018) — MDRC, a nonprofit, nonpartisan education and social policy research firm, released new results today from a demonstration and evaluation of Paycheck Plus, which offers workers without dependent children in New York City and Atlanta an enhanced Earned Income Tax Credit (EITC) worth up to $2,000 per year for three years (four times the value of the current federal EITC for singles). The new report was released at a Capitol Hill briefing sponsored by Tax Credits for Workers and Their Families, a nonpartisan initiative.

Three-year results from a random assignment evaluation of the program in New York City, which is led by the New York City Mayor’s Office for Economic Opportunity and implemented by the Food Bank for New York City and the New York City Human Resources Administration (HRA), include:

  • Paycheck Plus increased after-bonus earnings (earnings after accounting for taxes and the bonus) and reduced severe poverty. A majority of individuals in the Paycheck Plus group who had earnings in the eligible range applied for and received the bonus. The average bonus paid was about $1,400 in each year. Earnings after the bonus and taxes were 6 percent higher, on average, for the Paycheck Plus group.

  • Paycheck Plus modestly increased employment rates overall. Positive effects on employment were concentrated among women and the more disadvantaged men in the study. For example, Paycheck Plus increased employment rates for a subgroup of disadvantaged men (those who owed child support and/or had been previously incarcerated) in Year 3 by 5.8 percentage points (or 10 percent).

  • Paycheck Plus increased child support payments by noncustodial parents (parents who do not have custody of one or more of their children). In Year 3, for example, Paycheck Plus boosted the proportion of noncustodial parents who made at least one child support payment by 7.2 percentage points (or 12 percent).

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