How families view and use the EITC: Advance payment versus lump sum delivery

JL Romich, T Weisner - National tax journal, 2000 - journals.uchicago.edu
National tax journal, 2000journals.uchicago.edu
We analyze ethnographic data on 42 families' perceptions and uses of the EITC, including
the decision to use the lump sum or advance payment form. A behavioral life cycle (BLC)
model lends a theoretical framework and a description of family financial situations provides
context. Parents discuss and exhibit a strong preference for a lump sum combined tax refund
and EITC over the credit's advance payment option. We argue that the preference aligns
with the BLC model and is rational given scarce time, money, and personal energy. We …
We analyze ethnographic data on 42 families' perceptions and uses of the EITC, including the decision to use the lump sum or advance payment form. A behavioral life cycle (BLC) model lends a theoretical framework and a description of family financial situations provides context. Parents discuss and exhibit a strong preference for a lump sum combined tax refund and EITC over the credit's advance payment option. We argue that the preference aligns with the BLC model and is rational given scarce time, money, and personal energy. We conclude with implications and hypotheses for quantitative investigation of labor supply and well being issues.
The University of Chicago Press