Research Report A Universal EITC: Making Work Pay in the Age of Automation
Leonard E. Burman
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The universal earned income tax credit is a worker subsidy designed to offset wage stagnation. The base proposal would replace existing subsidies for working families with a refundable 100 percent tax credit on individual wages up to $10,000 and a larger, refundable child tax credit. The maximum credit grows with gross domestic product, guaranteeing that low-wage workers benefit from economic growth. The credits are offset by a broad-based value-added tax or income surtax. The proposals are progressive: After-tax income for the bottom quintile would increase by about 25 percent. The tax burden on the top 1 percent would increase by 7–14 percent of income, depending on financing.

This paper was originally published in the December 2020 edition of the National Tax Journal.

Research Areas Taxes and budgets
Tags Individual taxes Technology, trade, and automation
Policy Centers Urban-Brookings Tax Policy Center