It’s Time to Strengthen the EITC to Give Childless Workers a Much-Needed Boost

Current policy for the Earned Income Tax Credit helps push too many of these workers into poverty.

Chuck Marr is Director of Federal Tax Policy at the Center on Budget and Policy Priorities.
National Journal
Chuck Marr
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Chuck Marr
April 14, 2014, 10:19 p.m.

As Amer­ic­ans filled out their tax forms this year, mil­lions of low- and mod­er­ate-in­come work­ing fam­il­ies be­nefited from the Earned In­come Tax Cred­it. That’s im­port­ant to note on this April 15, Tax Day, be­cause the EITC not only en­cour­ages and re­wards work but lifts mil­lions out of poverty.

That com­bin­a­tion is the primary reas­on the EITC has en­joyed broad bi­par­tis­an sup­port for dec­ades and why suc­cess­ive pres­id­ents have worked to leave their own im­print on this tax cred­it. Pres­id­ent Ford signed it in­to law, while Pres­id­ent Re­agan pro­posed and signed a ma­jor EITC ex­pan­sion. Both pres­id­ents named Bush signed EITC in­creases as well, as did Pres­id­ents Clin­ton and Obama.

Still, there’s a glar­ing hole in the EITC. While the tax cred­it re­duces poverty among fam­il­ies with chil­dren by double-di­git per­cent­ages, as a re­cent Con­gres­sion­al Re­search Ser­vice re­port found, it does little or noth­ing to help low-wage work­ers who aren’t rais­ing minor chil­dren. A “child­less adult” work­ing full time at the min­im­um wage — an an­nu­al in­come of just $14,500 — earns too much to re­ceive the cred­it.

As a par­tial res­ult of the now-lim­ited EITC, child­less work­ers are the sole group of work­ers that the fed­er­al tax sys­tem pushes in­to — or in many cases, deep­er in­to — poverty.

For child­less work­ers who do qual­i­fy for the ex­ist­ing EITC, the cred­it is very small, av­er­aging just $270 a year. And the cur­rent child­less work­ers’ EITC is re­stric­ted to work­ers ages 25 to 64, so child­less work­ers un­der age 25 are in­eligible for it. That’s un­for­tu­nate, giv­en the low em­ploy­ment rates among less-skilled young work­ers and the im­port­ance of young people gain­ing a toe­hold in the eco­nomy.

Sup­port has been grow­ing on both sides of the aisle to strengthen the EITC to bet­ter help these child­less work­ers. Prom­in­ent con­ser­vat­ives, in­clud­ing George W. Bush’s former eco­nom­ic ad­viser Glenn Hub­bard and the Amer­ic­an En­ter­prise In­sti­tute’s Mi­chael Strain, have called for ex­pand­ing the EITC for child­less work­ers. On the oth­er side of the polit­ic­al spec­trum, Sens. Patty Mur­ray, Sher­rod Brown, and Dick Durbin have in­tro­duced pro­pos­als to strengthen the EITC for child­less work­ers, as has Rep. Richard Neal. Pres­id­ent Obama made a more ro­bust EITC for this group a cent­ral part of his budget pro­pos­al.

The pres­id­ent’s pro­pos­al would ex­pand the child­less work­ers’ EITC con­sid­er­ably, rais­ing the max­im­um cred­it to about $1,000 from its cur­rent $500 (for which few child­less work­ers are eli­gible), while also ex­pand­ing eli­gib­il­ity from those child­less in­di­vidu­als earn­ing less than $15,000 to child­less work­ers who bring in about $18,000 in 2015. The pro­pos­al would also al­low child­less adults between the ages of 21 and 25 to qual­i­fy for the EITC.

The be­ne­fits of a stronger EITC would go bey­ond rais­ing the in­comes of child­less work­ers and help­ing off­set their fed­er­al taxes. Lead­ing ex­perts be­lieve that an ex­pan­ded cred­it would help ad­dress some of the chal­lenges that less-edu­cated young people face — such as low labor-force par­ti­cip­a­tion rates, low mar­riage rates, and high in­car­cer­a­tion rates — by in­du­cing more of them to work (and to do so in the above-ground eco­nomy). That is pre­cisely what the lar­ger, ex­ist­ing EITC for fam­il­ies with chil­dren has already done, es­pe­cially for single par­ents.

Ex­pand­ing the child­less work­ers’ EITC would help a di­verse group of low-wage work­ers, from store clerks to child-care work­ers to truck drivers to home and of­fice clean­ers. Just un­der half of these work­ers are wo­men, and while many are young work­ers just start­ing out, a sig­ni­fic­ant share in­cludes work­ers over the age of 45. The pres­id­ent’s pro­pos­al to ex­pand the EITC would be­ne­fit about 2 mil­lion Afric­an-Amer­ic­an work­ers, 3.3 mil­lion Latino work­ers, and 7.2 mil­lion white work­ers.

Moreover, bol­ster­ing the EITC for child­less work­ers will ac­tu­ally help many fam­il­ies. Many so-called “child­less work­ers” are non-cus­todi­al par­ents who have fin­an­cial and par­ent­ing ob­lig­a­tions. The Pres­id­ent’s pro­pos­al to ex­pand the EITC would be­ne­fit about 1.5 mil­lion non­custodi­al par­ents. Their chil­dren do bet­ter when these par­ents are work­ing and are a pos­it­ive force in their lives.

Ad­di­tion­ally, many child­less work­ers are fu­ture par­ents. Ex­tend­ing the EITC’s pro-work be­ne­fits to them would boost their in­comes today while im­prov­ing their fu­ture abil­ity to provide for their chil­dren. And a child’s suc­cess also de­pends on his or her ex­ten­ded fam­ily and com­munity. A stronger EITC for “child­less” adults can sup­port chil­dren’s sib­lings, uncles, aunts, and grand­par­ents, who may be con­sidered “child­less” for tax pur­poses even if they live in the same home as their young­er re­l­at­ives. By help­ing to in­crease work, and pos­sibly im­prove mar­riage rates and re­duce crime, a stronger EITC can also help strengthen the com­munit­ies in which chil­dren live.

Right now, the EITC lifts mil­lions of Amer­ic­ans out of poverty each year, but it leaves mil­lions of oth­ers be­hind. Re­ward­ing the work of low-in­come child­less adults is an im­port­ant next step to al­le­vi­ate poverty.

It’s time for poli­cy­makers on both sides of the aisle to work to­geth­er to ac­com­plish this task.

Chuck Marr is dir­ect­or of fed­er­al tax policy at the Cen­ter on Budget and Policy Pri­or­it­ies.


The Next Amer­ica wel­comes op-ed pieces that ex­plore the polit­ic­al, eco­nom­ic and so­cial im­pacts of the pro­found ra­cial and cul­tur­al changes fa­cing our na­tion, par­tic­u­larly rel­ev­ant to edu­ca­tion, eco­nomy, the work­force and health. Email Jan­ell Ross at jross@na­tion­al­journ­al.com. Please fol­low us on Twit­ter and Face­book.

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