Researching Inequities in a Public Benefits Program with a Racial Equity Framework, 7 Takeaways

Blog Post
June 30, 2021

The New Practice Lab partnered with students of the Stanford Public Interest Technology (PIT) Lab to understand how the Racial Equity Framework can shape research by actively identifying anti-Blackness, racial biases, and inequities that exist in public policy. The following piece documents the findings of the Stanford PIT Lab as they researched how the Earned Income Tax Credit (EITC) design affects communities of color.

Over the past several months, the Stanford Public Interest Technology Lab with the support of the New Practice Lab conducted a research project focused on unpacking racial inequities in a federal benefits program. In light of the recent upsurge of the Black Lives Matter movement, calls for systemic equity are louder than ever. Many of these calls focus on reforming or abolishing the policing and carceral systems, which have a history of disproportionately harming people of color. Black and Latinx Americans represent 30 percent of the general population, but account for 51 percent of the jail population according to the Brennan Center for Justice. However, in addition to the problem of systemic inequity within America’s carceral institutions, discrimination exists within other systems too. Our research shows that public services, notably the Earned Income Tax Credit (EITC), is plagued with inequity as well.

The EITC is a federal tax credit that supports low-to-moderate income workers and families. It seeks to reward work and lift millions of people out of poverty. As is the case with the EITC, gaps between the intended and actual impact in public services are frequent, and they must be addressed. Even well-designed policies can and do fail to serve their intended beneficiaries. The EITC aims to help those most in need while preserving incentives to work. While it has succeeded in achieving these goals in many respects, the policy falls short of proactively addressing racial inequities in EITC eligibility and accessibility.

To guide our research on the EITC benefits program, we used the New Practice Lab’s Racial Equity Framework, which emphasizes a holistic understanding of policies and programs through examining historical context, quantitative data, and interactions with larger societal institutions. Using this framework, we examined the EITC from its inception in 1975 to its current state today.

Below are eight takeaways based on our research of the EITC. In particular, we discuss our learnings about the Racial Equity Framework, the importance of complimenting data analysis with qualitative research, and the inequities in the EITC and their potential solutions.

Below are eight takeaways based on our research of the EITC. In particular, we discuss our learnings about the Racial Equity Framework, the importance of complimenting data analysis with qualitative research, and the inequities in the EITC and their potential solutions.

1 . The Racial Equity Framework fosters a holistic understanding of systemic inequity.

The Racial Equity Framework provided a clear method and structure to guide our research, allowing us to easily divide the work amongst ourselves and focus on a distinct set of topics. Using the framework, we realized that no problem exists within a vacuum; by examining the historical context, intersecting systems, and data trends, we were able to develop a holistic understanding of inequality in the EITC. For example, when examining the way in which benefits are determined, we found that there is a “phase-in” range in which the amount of EITC benefits increases as a low-income household earns more. To contextualize this finding, we dove into the history of the EITC and learned that it was created as an alternative to the Aid to Families with Dependent Children program to reduce welfare rolls and reward work. This additional historical information points to the incentives behind the establishment of the EITC and its design to this day.

2. Inequities in larger societal institutions impact EITC eligibility.

Employing the Racial Equity Framework, we found that inequalities in family structure, college education, and hiring in the workplace limit equitable EITC eligibility:

Family structure: The EITC provides fewer benefits to childless workers, which especially disadvantages non-custodial fathers. Historically, federal welfare programs have often underplayed the role of non-custodial fathers in their children’s lives, denying these fathers benefits that could help them better support their children.

College education: Parents can only claim the EITC for a child between the ages 19 and 23 if the child is a full-time student. Thus, families who are unable or choose not to send their children to college or cannot send them full-time receive fewer EITC benefits. Since rates of college enrollment are lower among Black and Latinx Americans, this eligibility requirement creates a racial inequality in EITC access.

Hiring in the workplace: Discriminatory hiring practices lead to lower incomes and less consistent work history for Black and Latinx Americans, potentially decreasing these racial groups’ eligibility for the highest rates of EITC benefits.

3. The EITC presents barriers to apply, even for those who meet eligibility requirements.

When it comes to EITC access, many individuals who are eligible for the EITC fail to apply for the program and reap its benefits – in 2017, approximately 22% of those eligible for the program did not apply. We identified two key barriers that limit people who are eligible for the EITC: US immigration enforcement and the digital divide.

US immigration enforcement: Nearly half of Latinx citizens fear deportation for themselves, a family member, or a close friend. As a result, Latinx workers are disadvantaged in accessing the EITC due to chilling effects from US immigration policies, where many people fear that using government services could lead to deportation. Additionally, many EITC documents and resources are not translated into non-English languages, posing another barrier that disproportionately impacts Latinx citizens.

Digital divide: People of color are disproportionately digitally under-connected, which creates barriers in access given that application forms and information about the EITC are increasingly online. As of 2019, 39% of Latinx Americans and 34% of Black Americans lack broadband Internet service at home, significantly limiting their access to the EITC.

4. Limited data by race hinders efforts to measure and tackle inequity.

We began our data analysis by identifying the beneficiaries of the EITC across demographic variables. We found that the IRS provides a comprehensive dataset of EITC tax return information in 2015, but the records lack data by race. While this is reasonable given that race is not recorded on tax returns, it raises concerns about transparency and accountability to equitable EITC benefits. It is difficult to hold agencies such as the IRS accountable when reporting and evaluation of equity indicators are absent. President Joe Biden’s executive order to establish the Equitable Data Working Group is an important step towards advancing equity as it institutionalizes the disaggregation of data by race.

5. Employing both quantitative and qualitative methods is critical in order to uncover inequity.

During our quantitative analysis, we found that we simply did not have the data necessary to make strong claims about the distribution of EITC benefits across demographic variables. However, we did find that many of our results appeared to suggest that the EITC was racially equitable. While it would have been easy to take these results at face value, our qualitative analysis of the historical context and efficacy of the EITC encouraged a more critical interpretation of the program’s supposed success.

For instance, our initial quantitative results indicated that counties with higher proportions of Black, Indigenous and people of color (BIPOC) eligible for the EITC often had greater average amounts of EITC benefits (see figure below).

Source: (Sources: IRS EITC Data and Census American Community Survey)

Each dot in the above figure represents a county. ttrendlines show that counties where a higher proportion of EITC-eligible tax filers are Black tend to have greater average EITC benefits while counties where a higher proportion of EITC-eligible tax filers are white tend to have lower average EITC benefits.

At first glance, this finding may seem to suggest that BIPOC do not face barriers in EITC access. However, the data masks the number of people applying for the EITC, as well as who would be eligible; in other words, this average amount in benefits could be based on 5 or 50000 EITC filers, and the proportion of EITC-eligible filers who actually receive the credit remains unknown. Additionally, we do not know if the subset of people applying for the EITC is racially representative of the county. Our qualitative research on the EITC’s interactions with other systems found that BIPOC are disproportionately under-connected to the Internet and may have difficulty accessing the EITC. In fact, we find that counties with lower digital connectivity also have fewer EITC recipient benefits (however, it is possible this is due to the density of the county, as rural areas are most likely to lack broadband and have low population density, see figure below).

As the percentage of a county population with broadband Internet access increases, the average amount of EITC benefits also increases
Source: (Source: Federal Communications Commission Broadband Data)

Thus, while BIPOC who apply for the EITC may receive substantial benefits, the total number of BIPOC applying for the EITC and receiving benefits may be low in part because of the digital divide. In short, our qualitative research on accessibility barriers faced disproportionately by BIPOC uncovered inequities that our quantitative research alone did not show.

6. Applying the Racial Equity Framework highlights potential solutions.

Applying the Racial Equity Framework highlighted important gaps between the intended and actual impact of the EITC benefits program. As a result, the framework pointed to potential solutions to rectify inequities in the EITC such as:

  • Extending EITC eligibility to childless workers below 25 to address inequalities in eligibility.
  • Employing audiovisual communication methods to increase EITC accessibility to non-English speakers and people with lower literacy levels.
  • Expanding the Volunteer Income Tax Assistance (VITA) program and having culturally-competent community workers such as promotores walk their peers through the EITC application in order to address disparities in access to tax preparation services.
  • Using in-person and digital advertising methods and including snail-mail and online options for application submission in order to increase EITC accessibility across the digital divide.

7. Policies and programs take time to understand well.

Although we found it rewarding to research the intricacies of the EITC, we recognize that most EITC-eligible people do not have the time we were afforded to study the policy in-depth and advocate for changes that would benefit their communities. We hope that policymakers make systemic changes to ensure that the EITC is more inclusive, as current barriers and complexity in the application process prevent many eligible people from utilizing the program.

We learned a great deal about inequalities in the EITC by using the Racial Equity Framework. Perhaps our most important takeaway is that quantitative data often needs qualitative context to paint a clear picture of the actual implications, especially when they affect human lives.

We believe that it is important to examine policies and programs at their inception and as they evolve in order to uncover systemic issues, assess progress, and eradicate inequalities that disproportionately impact people of color and other marginalized communities today. While institutional change is a long and complex process, we hope that our research helps inform policymakers and raises awareness about the need to make the EITC and other benefits programs equitable and inclusive for everyone.

This blog post was written based on a joint project between New America and the Stanford Public Interest Technology Lab. We embarked on this project to help advance research and catalyze policy action on racial justice. Specifically, our goal was to identify racial inequities within the Earned Income Tax Credit benefits program and interacting institutions in society. Following the framing questions of the New Practice Lab's Racial Equity Framework, we employed both quantitative and qualitative methods to understand the impact of systemic inequities on Black, Latinx, and other vulnerable populations seeking public benefits.