Syracuse
University
Economics
Andrew Hanson, PhD Candidate
"Utilization of Employment Tax Credits: An Analysis of the 'Empowerment Zone' Wage Tax Credit"
Abstract:
This paper provides estimates of utilization for
the Empowerment Zone (EZ) wage tax credit, a subsidy claimed by
employers who operate in and hire residents of federally designated
areas experiencing economic distress.
The EZ credit is currently the largest employer-based wage tax
credit in the federal tax code in terms of dollars claimed, with almost
$250 million claimed in 2002. 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 in 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. I create these
national estimates of use with information on credit dollars claimed
from the IRS and population data on the eligible population from the
Census. These measures of tax credit use are an alternative to the use
rate of firms that are presented in the existing literature, and reveal
how effective the credit is at reaching residents of the target area.
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