The voices of Urban Institute's researchers and staff
April 8, 2016

Proposed earned income tax credit expansions could penalize marriage for many low-income workers

April 8, 2016

President Barack Obama and Speaker Paul Ryan have proposed similar expansions of the earned income tax credit (EITC) for low-income workers without children.

Their goal is laudable: to provide modest additional income support for low-income workers currently excluded from the EITC. But as designed, their proposals would penalize many low-income workers who choose to marry or are married. Taking that step would not only provide a disincentive to marriage, but it would also be unfair to many married couples and erode support for the credit itself and for wage subsidies more broadly.

Fortunately, lawmakers can fix this flawed design by splitting credits for low-wage workers and benefits for children. Before I explain how, here is a bit of background.

The EITC, enacted in 1975 under President Gerald Ford, has been expanded under every succeeding president and has broad bipartisan support. As cash welfare programs—like Aid to Families with Dependent Children and its replacement, Temporary Assistance to Needy Families—have shrunk as a share of both the economy and the budget, the EITC has become a bedrock of the nation’s social welfare structure and the largest government cash support for those neither retired nor disabled.

About 97 percent of EITC benefits, however, go to households with children, particularly single-parent families. 

Read the rest on TaxVox or The Government We Deserve.

Photo via Shutterstock

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