The EITC: Expectation, knowledge, use, and economic and social mobility

This paper presents our findings on the knowledge and use of the 1997 Earne d Income Tax Credit (EITC) based on a sample of Chicago area households, wi th children, that filed tax returns in the winter and spring of 1998. Respo ndents reported in detail about using their federal tax refunds (including the EITC) to pay bills, purchase new items, or save. Data were also gathere d on respondents' prior knowledge of the EITC and their ability to make par ticular expenditures without the help of the EITC. Uses of the EITC are div ided into those that improve economic and social mobility (e.g., purchase a car pay tuition, change residence) and those that primarily help to make e nds meet (e.g., pay routine bills, purchase food). This is among the first papers to address these issues, despite the fact that the EITC is our large st refundable tax credit program targeted at low-income families.