California’s new EITC provides an opportunity to consider whether
or not the design characteristics of the federal EITC, which most
states have simply replicated, should be reconsidered—either by
states acting on their own or perhaps by the federal government itself
through modifications of the federal credit. Our analysis highlights
the various trade-offs inherent in alternative credit designs and shows
that by specifying different parameters states can differentially affect
specific groups of taxpayers.
This article was originally published in the New York University School of Law
Tax Law Review.