Do Public Libraries Play a Role in Tax Filings and Earned Income Tax Credit Uptake?

• In Event: Wage Subsidies and Tax Credits

Abstract

Every year, millions of eligible taxpayers fail to claim the Earned Income Tax Credit (EITC). Most of these non-claimants are low earners who are not legally required to file a tax return, due to their earnings being below filing thresholds. However, high rates of non-filing in this low-income population limits the ability of the U.S. income tax system to redistribute wealth via tax refunds and tax credits, such as the EITC. Relatedly, 13% of poor Americans lack personal internet access, which may hamper their ability to file tax returns or learn about the credits available to them. We test whether the presence of public libraries, which among other things provide publicly accessible, internet-enabled computers, relaxes this friction. We find that after a community gains (loses) access to a public library, personal income tax filings surge (fall) on the order of 2.7% (1.7%). We find that these effects are strongest for low-income taxpayers and are four times larger in predominantly Black communities (where fewer households have home internet). Similarly, we find that a community gaining access to a public library predicts a 2.5% jump in EITC uptake, a result which is also about three times stronger in Black communities. Broadly, our results suggest that a lack of library access, and the associated access to free internet-enabled computers and tax assistance, discourages tax filing and may partially explain why 20% of American households that qualify for the EITC fail to claim it.

Authors

• Shannon Chen, University of Arizona

• David Kenchington, David.Kenchington@asu.edu