Thursday, September 27, 2007

Study finds rural workers gain the most from Earned Income Tax Credit

A new study from the Carsey Institute at the University of New Hampshire shows that the Earned Income Tax Credit has more benefits for working poor in rural areas than those in urban areas. Rural families in the South used the credit the most.

The study, “EITC is Vital for Working-Poor Families in Rural America,” says that while only 16 percent of U.S. tax filers in 2004 were from rural areas, rural filers claimed 20 percent of the $39.8 billion in EITC funds, or about $7.8 billion. Most the money goes to working families with children who have earnings below $35,000 a year.

“The amount of money received by the average rural family ($1,850) may not seem like much to more affluent families, but for low-income families it can be an enormous help. Research shows that for kids growing up in low-income families, even a small boost in income can lead to better child outcomes,” said study authors William O’Hare, rural fellow with the Carsey Institute and Elizabeth Kneebone, research analyst with the institute.

“As Congress entertains legislation to expand the EITC program, it is important to recognize how vital this program is for low-income families in rural America,” the authors said. "The Carsey Institute conducts research and analysis on the challenges facing rural families and communities in New Hampshire, New England, and the nation. To read the full study, go here.

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