Examining the Gap in the Earned Income Tax Credit

Jennifer Lewis

Abstract


One of the largest federal anti-poverty programs, the Earned Income Tax Credit (EITC), is implemented through the tax code and helps lift millions of workers above the poverty threshold. The EITC provides workers with increased financial flexibility and in many cases incentivizes saving among those who would not otherwise be able to set money aside. However, a large disparity exists in the size of the credit for workers with and without dependents, as workers with children receive more than six times the amount a childless worker receives. Because of the benefits associated with the EITC, including its poverty-reduction capabilities and labor supply incentives, many policymakers are calling for an expansion of the program to mitigate this gap. In addition to analyzing the EITC in its current form and several proposed expansions, this article also examines an evaluation of a pilot expansion program occurring in New York and Atlanta.


Keywords


earned income tax credit; EITC; childless EITC; childless workers; noncustodial parents; tax expenditure

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DOI: http://dx.doi.org/10.4079/pp.v24i0.17603