The Earned Income Tax Credit as supplementary food benefits and savings for durable goods

The Earned Income Tax Credit (EITC) transferred more than $67 billion to taxpayers in 2016. We estimate changes in spending that occur following EITC disbursement. We make three key advances in identifying the effect: using estimated EITC dollar benefits to differentiate the impact of low from high benefits; estimating the impact by liquid assets; and, employing a triple‐difference model around the 1993 expansion and a separate triple‐difference model over the number of children. We find that the EITC acts as supplementary SNAP benefits for those with small EITC benefits, while those with larger benefits increase spending on durables, particularly automobiles.