Utilization of Employment Tax Credits: An Analysis of Employees Eligible for the 'Empowerment Zone' Wage Tax Credit

21 Pages Posted: 16 Nov 2006

See all articles by Andrew Hanson

Andrew Hanson

Marquette University- Department of Economics

Date Written: November 14, 2006

Abstract

This paper gives the first estimates for employee use of the Empowerment Zone (EZ) wage tax credit, a wage subsidy claimed by employers who operate in and hire residents of federally designated areas experiencing economic distress in the 1990s. I show that about 6.4 percent (and at least 3.5 percent) of the working age population was claimed under the EZ wage credit for 1999. In addition, I estimate that 24.2 percent (and at least 13.1 percent) of those employed inside of the target area were claimed for the credit. These national estimates of use are created using information on credit dollars claimed from the IRS as well as population data on those eligible to be claimed from the Census. The measures of tax credit use presented in this paper are an alternative to firm use rates presented in the literature, and reveal how effective the credit is at reaching residents of the target area.

Keywords: tax credit, zone, empowerment zone, utilization

JEL Classification: H2

Suggested Citation

Hanson, Andrew, Utilization of Employment Tax Credits: An Analysis of Employees Eligible for the 'Empowerment Zone' Wage Tax Credit (November 14, 2006). Available at SSRN: https://ssrn.com/abstract=944974 or http://dx.doi.org/10.2139/ssrn.944974

Andrew Hanson (Contact Author)

Marquette University- Department of Economics ( email )

P.O. Box 1881
Milwaukee, WI 53201-1881
United States

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