Federal EITC has unexpected result, researchers say – it decreases domestic violence

Fifty years since the federal earned income tax credit went into effect and a team of researchers from UConn and City University of New York have identified an unintended benefit of the antipoverty program – a significant reduction in rates of intimate partner violence among unmarried women.

“There’s been enough literature to show that good things happen because of the earned income tax credit, but what was surprising to us is the relatively large effect it has on intimate partner violence,” says UConn’s David Simon, an associate professor of economics and study co-author. “To a low-income family, $1,000 a year is a lot.”

Simon and his colleagues – UConn finance professor Resul Cesur, and Núria Rodríguez-Planas and Jennifer Roff from City University of New York – specifically looked at rates of intimate partner violence, or IPV, since the 1993 expansion of the federal earned income tax credit using data from the National Crime Victimization Survey from 1992 to 2000.

In “Intimate Partner Violence and Income: Quasi-Experimental Evidence from the Earned Income Tax Credit,” published last month in the University of Chicago’s Journal of Law and Economics, they found the credit decreased the prevalence of physical and sexual violence among unmarried, low-educated women by 9.73%. Further, it decreased the counts of such violence by 21%.

“Most policymakers, when they look at the earned income tax credit, they’re thinking about two things: reducing poverty and incentivizing work. It’s very effective at both of those things, but I don’t think decreasing intimate partner violence was on their mind,” Simon says.

The earned income tax credit, or EITC, is a credit for taxpayers who fall below certain income levels and meet certain employment requirements. President Gerald Ford signed it into law in March 1975, and it was significantly expanded under President Bill Clinton as part of the Omnibus Budget Reconciliation Act of 1993.

Generally, it offers $1,000 off a tax payment to the IRS or, in most cases, a refund directly to the taxpayer. Those with children receive higher amounts depending on the number they claim as dependents.

Many states have their own EITC programs, which affect people’s state tax liabilities, but researchers looked only at the federal credit in this study. State programs result in a much smaller financial benefit to the taxpayer, although a person often qualifies for both simultaneously.

Roff and Rodríguez-Planas brought the UConn team into the project after they started thinking about how income levels affect domestic violence. But they knew it wasn’t enough to just look at the relationship between income and IPV, Roff says.

In developing countries, higher income among women can increase rates of domestic violence, as a perpetrator extracts those extra resources from their victim to rebalance power in the home, Roff notes.

Conversely, in other places, a woman’s higher income can bring down the prevalence of domestic violence simply because moving up the socioeconomic ladder includes more education, stable family environments, and other nonmonetary resources that are more accessible, Simon adds.

To strip away those influences, the team settled on using the EITC as a benchmark, which meant their initial query grew into a study of the effects on IPV of employment and income as they relate to the tax credit.

“It’s an established fact that during COVID, there was a big increase in domestic violence: Everybody was stuck at home in one small space and there was the stress of COVID,” Roff says. “So, we started thinking that if the earned income tax credit increases employment, then women simply are outside of the house and not exposed to it anymore, much like the period before and after COVID.”

Couple that with decreased financial stress from the tax credit, in addition to the higher paycheck from the requisite employment to qualify for it, and they noticed measurable declines in IPV, which, according to the study, affects a quarter of women at some point in their lives.

“That’s a huge percent,” Simon says. “We probably all know multiple people who we care about who’ve been through this.”

Ten million women annually are victims of rape, physical violence, or stalking, the paper says, noting the U.S. Centers for Disease Control and Prevention estimates the cost amounts to $3.6 trillion, or $103,767 per victimized woman, including the price of medical care, lost productivity, and the criminal justice system.

Researchers estimate that since the EITC’s expansion in 1993, nearly 42,000 fewer women have experience IPV, a benefit of $4.3 billion in 2003 dollars, the study says.

“Intimate partner violence is a widespread and costly social phenomenon,” Simon says. “Even if you don’t care about the human value of reducing this, there are efficiency gains in handling it more effectively - and I think most of us do care about the human element.”

Roff say she and Rodríguez-Planas now are looking at the success of policies specifically targeting IPV, like the national Lethality Assessment Protocol, and are finding they don’t make significantly more gains than what the EITC has done.

“It’s an added bonus of this tax policy,” Roff says of its effect on IPV. “It’s really nice that this has had other beneficial effects outside of its direct targeted plan, which was to reduce poverty and improve family incomes.”