Research Report Considerations in Efforts to Restructure Work-Based Credits
Steve Holt, Elaine Maag
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The Internal Revenue Code has replaced traditional means-tested programs as the principal means for transferring income to low earners. The largest vehicle is the Earned Income Tax Credit (EITC), now supplemented by both the Child Tax Credit (CTC) and the Making Work Pay tax credit (MWP). This paper looks at the system's evolution, the important role played by the tax system in assisting low earners, and the complexities presented by the current approach. It offers principles to guide the design of a worker credit and child benefit that would replace the EITC, CTC, and MWP, along with a specific proposal.
Research Areas Economic mobility and inequality Social safety net Taxes and budgets
Tags Fiscal policy Poverty Individual taxes Income and wealth distribution
Policy Centers Urban-Brookings Tax Policy Center