Despite these potential gains from social safety net programs, many households fail to claim benefits to which they are entitled. We consider the role of administrative burdens associated with tax filing in the imperfect take-up of refundable tax credits and spillover effects in take-up across programs. We examine Hawai`i's food and excise income tax credit that is available to low-income households that is meant to mitigate some regressivity of its general excise tax, but has a low take-up rate. We exploit policy variation in the cost of non-filing driven by a large expansion to the state earned income tax credit (EITC) that creates sharp and heterogeneous treatment intensity by household types and income levels. We use Hawai'i administrative tax records to compare the income distribution of first-time filers around the expansion to examine how the value of refundable tax credits affects tax filing and credit take-up.

College financial aid in the US creates a large implicit tax on parent income. Like many taxes, it is difficult to learn one’s tax rate. Using federal tax data, we provide the first estimates of the response of parent income to the college aid implicit tax (elasticity = .04). We show how to combine the elasticity with survey data to identify deadweight loss from the tax, given that individuals misperceive their tax rate. Misperception of the college aid implicit tax increases deadweight loss by 127%, driven by substantial heterogeneity in misperception across individuals.

This paper studies the employment effects of income tax credits on hard-to-tax labor-intensive consumer services using administrative data on establishments with employees subject to social security payments. Preliminary difference-in-differences estimation result suggest an increase of employment in services such as gardening work as well as child or elderly care. However, for services of craftsmen where the largest part of the tax expenditures is concentrated we find a decline of employment, in particular for small firms.

Population aging makes elderly health a growing policy concern. Using five waves of China Family Panel Studies data, this paper treats the introduction of China’s special additional deduction for elderly support as a quasi-natural experiment and estimates its impact on elderly health with a DID design. We find that the targeted tax deduction significantly improves both physical and mental well-being. Mechanism evidence suggests the deduction strengthens children’s incentives to support parents: higher disposable income is transferred to the elderly and translated into greater medical spending, more emotional companionship, and increased time devoted to physical exercise. Heterogeneity analyses show stronger benefits for men and for younger seniors. Effects are concentrated among middle-income households above the basic deduction threshold, with little impact on ultra-high-income groups. Finally, we document an unintended consequence: a uniform deduction threshold disproportionately benefits higher-income families, widening health inequality among older adults.