How Tax Credits Can Support Formerly Incarcerated Individuals and Their Families

• DOI: http://doi.org/10.1177/00027162221114232
• Published date: 01 May 2022
• Date: 01 May 2022
• Subject Matter: Improving Human Capital and Labor Market Opportunities

134 ANNALS, AAPSS, 701, May 2022

DOI: 10.1177/00027162221114232

How Tax

Credits Can

Support

Formerly

Incarcerated

Individuals and

Their Families

By

NATALIE SMITH

1114232ANN THE ANNALS OF THE AMERICAN ACADEMYTAX CREDITS AND FORMERLY INCARCERATED INDIVIDUALS

research-article2022

Tax credits like the Earned Income Tax Credit (EITC)

can provide vital income support to people returning to

their communities following incarceration. But the cur-

rent design of the EITC prevents many from accessing

the income support that it provides. In this article, I

propose expanding the EITC so that it better serves

communities that have been harmed by punitive crimi-

nal legal policy. An expanded EITC could raise the

incomes of community members returning from incar-

ceration by 8 to 40 percent and raise the incomes of

some caregiving families by 20 to 35 percent. I also

consider the potential of the Work Opportunity Tax

Credit (WOTC) to encourage employers to hire justice-

involved workers. Finally, I argue that policy-makers

should develop a bolder, refundable tax credit targeted

at individuals who return to their communities from a

variety of institutions, including carceral facilities. With

more inclusive tax credits, social policy can begin to

redress the harms of mass incarceration and support a

vision of public safety that is centered on flourishing

communities.

Keywords: tax credits; EITC; WOTC; incarceration;

reentry family; community

Introduction

Mass imprisonment has taken a tremendous

social and financial toll on the low-income,

Black, and Latinx communities in which car-

ceral enforcement is concentrated (Garland

2001; Western 2006; Clear 2007). Poverty

presents perhaps the greatest threat to eco-

nomic well-being and mobility for people

returning from incarceration, including those

under community-based correctional supervi-

sion. As such, supporting the economic well-

being of people returning from incarceration,

Natalie Smith is a JD candidate at Yale Law School.

Her research focuses on the effects of incarceration on

families, with publications in Demography and PNAS.

Her primary interest is in how the legal system can shift

power to marginalized communities.

Correspondence: natalie.smith@yale.edu

TAX CREDITS AND FORMERLY INCARCERATED INDIVIDUALS 135

many of whom face significant obstacles to steady employment (Western 2002;

Pager 2003), is an opportunity for policymaking that can promote both indi-

vidual and family wellbeing and social justice. As such, supporting the eco-

nomic well-being of people returning from incarceration, many of whom face

significant obstacles to steady employment (Western 2002; Pager 2003), is an

opportunity for policymaking to promote individual and family well-being, and

social justice.

Punitive criminal legal policy heavily burdens the families of incarcerated

people and, in particular, their female relatives and their children (Western

2018). One in four women in the United States has a family member who has

been incarcerated, and nearly half of all Black women have a currently or for-

merly incarcerated family member (Lee etal. 2015). Due to the stark material

hardships faced by returning community members following prison release,

family members play a key role in supporting reentry (Fontaine et al. 2012;

deVuono-powell etal. 2015). Older female kin—grandmothers, mothers, and

sisters—play an especially crucial role in providing housing and financial

resources (Western et al. 2015; Western 2018). In a longitudinal interview

study of individuals reentering neighborhoods in Boston, Western etal. (2015,

1524) find that “about 80 [percent] of respondents who reported staying with

family were staying with female relatives, and around half of these were moth-

ers.” While families provide significant resources to their returning family

members (Harding, Morenoff, and Wyse 2019), the reentering family member

may not be able to reciprocate financially, as the earnings loss associated with

imprisonment ranges between 10 and 30 percent (Western 2002). In this con-

text, the family members of reentering people often operate as de facto front-

line service workers. Few families, however, receive the resources available to

formal support programs, and many must shoulder the costs of caregiving

alone. The chronic stress, instability, and familial disruptions related to caregiv-

ing work indicate a need for “family support interventions” in reentry policy

(Pettus-Davis 2021, 12).

Further, an estimated 2.5 million children under the age of 18 years have a

parent incarcerated in prison or jail (Wakefield and Wildeman 2014). Parental

incarceration is associated with multiple negative outcomes, including reduced

family income, increased risk of homelessness, and diminished school achieve-

ment (Western and Smith 2018). Formerly incarcerated fathers, on average,

make lower contributions to family finances when compared to similarly situated

fathers who have never been incarcerated, due to incarceration’s corrosive effects

on labor market prospects and relationship stability (Western and Smith 2018;

Geller et al. 2011). Economically, incarceration acts “like a hidden tax” that can

significantly lower household income (Braman 2004, 156).

NOTE: An earlier draft of this article was prepared in David Super’s course on Public Welfare

Law at Yale Law School. I am grateful to David Super, Bruce Western, David Harding, Jasmin

Sandelson, Anne Alstott, and Mark Firmani for their helpful comments on prior versions of

this article.