Over the past two decades, the Federal tax code has increasingly
been used as a tool for achieving various social and other policy
objectives such as income support for low- income households.
The primary method for providing such support has been the expanded
use of tax credits, especially refundable tax credits such as the
earned income and child tax credits. As a result of this
expanded use, these credits have grown in importance relative to
Federal outlays for tradition income support programs.
Also, since rural taxpayers have historically had lower
incomes and higher poverty rates than urban household a larger
share of rural taxpayers benefit from Federal tax policies aimed at
lower-income taxpayers. The earned income and child tax
credits have provided a substantial boost in income to low- and
middle income rural taxpayers and have reduced the rural poverty
rate. See Federal Tax Policies and Low-Income Rural
Households, EIB-76, May 2011.