Utilizing Data to Tell Your Story

1. Utilizing Data to Tell Your Story Jason Castillo, MSW, PhD Third Annual Conference on Poverty Community Action Partnership of Utah September 17, 2013

2. The continued growth and acceptance of [human] social [service practitioner] knowledge [and skills] depends not only on [human social service practitioners’] appreciation and support of research but also on their competence to engage in research and use research findings [data] (Proctor, 2001)

3. Functions of Research Develop, acquire, and promote newfound knowledge. Increase accountability. Improve communication. Enhance access to scarce resources.

4. The Utilization of the EITC and Income Tax Refunds among Low-Income Populations Participating in VITA Programs in the State of Utah

5. Perceptions of Low Income Populations in the United States “…are stupid, lazy minorities unwilling to contribute to society, a drain on resources, and undeserving of living off the hard work of others…” “…are leeching off tax paying Americans because [they] are too lazy to work…” “…are instigators of crime, addicts, and incapable of ever overcoming their current circumstances…” “…are living large with a flat screen, the latest clothing lines, and driving nicer cars than us working folk…” Sources: Backlash Against Government Corruption and Hypocrisy, 2011; Blankenship, 2011; Dogg, 2011

6. The Status of Low and Moderate Income Populations in the United States The unemployment rate stood at 8.2 percent in June 2012. Labor market pressures fall especially on communities of color, young workers, and those with less education. Household incomes continue to drop amid prolonged labor market weaknesses In the first quarter of 2012, 7.4 percent of home mortgages were delinquent and 4.4 percent were in foreclosure. In 2010, 15.1 percent of all persons lived in poverty, the highest rate since 1993. Poverty rates for blacks and Hispanics greatly exceed the national average Source: Weller, 2012

7. The Status of Low and Moderate Income Populations in Utah The recession has left approximately 12% of Utah families financially insecure and poor. Even more families in Utah are financially vulnerable with… 22%are asset poor, lack financial resources—money in the bank and assets in a car or home—to weather a job loss or emergency. 35%are liquid asset poor, no resources—car, home, or business that can be converted into cash—to weather a job loss or emergency. Source: Corporation for Enterprise Development, 2012

8. Low Income Populations in the United States: EITC and Income Tax Refunds In 2009, ~100 million taxpayers (nearly 80 percent) received a tax refund because they over-withheld taxes in the previous year and ~27 million low-income families received the EITC. The benefits of the EITC include: increase families purchasing power, reduce income inequality by supplementing wages, and decrease child poverty. ~20-25% of low income households who are eligible for the EITC do not claim the credit, leaving billions of tax credit dollars unclaimed. Low income households pay higher interest rates to finance consumption until their income tax refund arrives, pay additional fees to accelerate the delivery of their income tax refund, and have high expenditures on durable goods within the first-quarter of the year. Sources: Berube et al, 2002; Elliehausen 2005; GAO, 2011; Goodman-Bacon & McGranahan, 2008; IRS, 2004; Mammen & Lawrence, 2006

9. Methodology • A cross sectional survey design was used in this exploratory study. • In January-April 2010, data were collected from ~5,000 low and moderate income individuals in the state of Utah. • Participants completed a 45-item survey while filing their income taxes with VITA volunteers at one of several community-based VITA Programs in the state. • Binary logistic regression was applied to this study.

10. Characteristics of the Sample (n = 2,189) Half of the participants were female. The average age of the participants was 39 years-old. Two-thirds of the participants were Caucasian. Almost two-thirds of the participants filed as a single-person. The mean number of dependents was less than 1. The average number of years of education completed was 12. The average adjusted gross income was $10,331.

11. Measures: Dependent Variables Have you ever used your refund to… Purchase a home or mobile home Purchase a car or truck Purchase household appliance Purchase a computer or laptop Purchase a cell phone or cell phone plan Purchase furniture Help a family member with the cost of a green card Pay property taxes Pay medical bills Pay car or truck insurance Invest in micro-business/self-employment Pay personal bills/expenses Pay school expenses Pay payday loans Put into a savings account Pay credit card debt Dichotomous measures: 0 = No and 1 = Yes

12. Results: Participants’ Socio-demographic Characteristics and Utilization of Income Tax Refund Older participants were more likely to use their income tax refund to purchase a household appliance, computer or laptop, property taxes, or to pay medical bills. Non-Caucasian participants were less likely to use their income tax refund to payoff payday loan. Single-female participants were less likely to use their income tax refund to purchase a household appliance. Participants with children were more likely to use their income tax refund to purchase a home or mobile home or car or truck. Participants’ with higher adjusted gross income were more likely to use their income tax refund to pay car or truck insurance.

13. Results: Participants’ Receipt of EITC, Federal and State Income Tax Refund, and Utilization of Income Tax Refund Participants that received the EITC were more likely to use their income tax refund to pay car or truck insurance. Participants that received the federal income tax refund were more likely to use their income tax refund to purchase a computer or laptop or furniture. Participants that received a state income tax refund were less likely to use their income tax refund to pay property taxes.

14. Discussion The results presented here indicate that older participants, participants with children, and participants that received the EITC and federal income tax refund were more likely to utilize their funds to achieve the goals of… Strengthening the incentive to work, Helping low-wage working families make ends meet, and Promoting the well-being of children.

15. Limitations Statewide, cross-sectional design Social desirability bias—participants self-report Sample not representative of all low income populations

16. Implications for Research Need for additional quantitative and qualitative research examining low income populations utilization of EITC and income tax refunds… Specific across durable, non-durable, and other expenditures. Over an extended period of time. To support current consumption or to meet more strategic longer term goals. Across geography (rural and urban).

17. Implications for Policy and Practice Given the emphasis of “Earn it, Keep it, Save it” in the state of Utah’s VITA Program, the program may wish to further integrate savings components and mechanisms into the program, which may further contribute to low income families/households strategic long-term goal planning. The fact that so few low-income populations have savings could be because means-tested programs limit the amount of assets a family may have. Therefore, states may further ease liquid asset tests for eligibility of means-tested programs. Develop legislation to create special subsidized savings accounts for low-income populations (i.e. Universal Savings Accounts). Source: Smeeding, Phillips, & O’Connor, 1999; Zelnak, 2004

18. Thank you and questions Jason Castillo, MSW, PhD University of Utah College of Social Work jason.castillo@socwk.utah.edu

19. The Utilization of EITC and Income Tax Refunds EITC eligible households spent 3-18% more of their income tax refund than non-eligible EITC households. EITC eligible households spent 9% more of their refund on furnishings, electronics, and vehicles than non-eligible EITC households. EITC-eligible households used their tax returns to purchase furniture, appliances, entertainment equipment, transportation, and housing. EITC-eligible households planned to use their income tax refund to pay bills or debt, purchase a vehicle, and purchase a home. Sources: Barrow & McGranahan, 2000; Goodman-Bacon & McGranahan, 2008; Linnenbrink, Rupured, Mauldin, & Moss, 2006; Romich & Weisner, 2000

20. Gaps in the Literature A limited amount of research examining the utilization of EITC and income tax refunds exists in the U.S. Of the limited research, they have… Sampled low-income, single-parent mothers only, rural families/households only, or families/households in one community only. Utilized large national datasets that do not account for factors including families/households socio-demographic factors, filing status, receipt of EITC and federal and state income tax refunds, and current consumption.

21. Research Questions • What is the relationship between low income populations socio-demographics and the utilization of their income tax refund (EITC, federal, and state)? • What is the relationship between low income populations receipt of EITC and the utilization of their income tax refund? • What is the relationship between low income populations receipt of federal income tax refund and the utilization of their income tax refund? • What is the relationship between low income populations receipt of state income tax refund and the utilization of their income tax refund?

22. Measures: Covariates Gender: 0 = Male and 1 = Female Age: 15-89 (m = 39.57, sd = 17.17) Race and ethnicity: 0 = Caucasian and 1 = Non-Caucasian Filing status: 0 =Single Male, 1 = Single Female, 3 = Head of Household Male, 4 = Head of Household Female Number of dependents: 0-8 (m = .65, sd = 1.09) Years of education: 0-23 (m = 12.51, sd = 3.45) Adjusted gross income: $0-$22,315 (m = $10,331, sd = $6,318)

23. Measures: Independent Variables EITC $0-$5,657 (m = $862, sd = $1,481) Federal income tax refund: -$2,469-$14,370 (m = $1,486, sd = $2,053) State income tax refund: -$720-$5,710 (m = $143, sd = $224)