Max, please clarify. Does this mean that 85% of people for whom employers
have filed the necessary papers do in fact "take up" the EITC? But then
for what percentage of eligible workers are papers not filed? Don't know
what you mean by take up.
It means given their income and family circumstances, 85% or so of those eligible are in the program. Take up means program participation.
Of those in the program, about one percent get benefits through their employer. Almost all get benefits by applying when they file their Federal income tax, with no involvement of the employer.
Often low-wage workers have irregular work schedules, hold multiple jobs over the course of a year, and have changed family circumstances over the course of a year. All these can change their benefits. It can be seen that for an employer or employee, on an hourly basis, determining the exact amount of subsidy is not easy. (Imagine arranging your withholding so that your income tax bill in April was always exactly zero.) This may be a blessing in disguise because it reduces the likelihood that employers can substitute the credit for wages. One suspects workers would just as soon not involve their employer in their EITC application for just this reason. There is also survey evidence that workers like getting the big check, just as taxpayers like getting a refund check rather than optimizing their withholding.
My paper on this with Bob Cherry will be out April 15.