Director of Federal Tax Policy
We've noted that the Earned Income Tax Credit (EITC), which reduces poverty while encouraging and rewarding work, has enjoyed broad support over the years. One of its champions was President Reagan, who proposed and then signed a major expansion of it in the 1986 Tax Reform Act.
While Reagan is often quoted as calling the EITC "the best anti-poverty, the best pro-family, the best job creation measure to come out of Congress," he was, as Tax Policy Center director Len Burman blogged this week, actually referring to the 1986 tax reform as a whole, not just its EITC component. But that takes nothing away from Reagan's role in strengthening the EITC.
Burman correctly notes that "Republican icon Ronald Reagan supported the Tax Reform Act of 1986's expansion of the EITC." Indeed, Reagan did more than support the EITC increase; he proposed it.
The tax proposals that President Reagan submitted to Congress in 1985 included a proposal to phase in the credit more quickly as a worker's income rises, expand the maximum EITC, phase the credit out more slowly so that more families would be eligible, and index these parameters for inflation. The final legislation included the Reagan-proposed phase-in (14 percent) and phase-out (10 percent) rates, as well as his proposed indexation. Congress went even further on its increase in the maximum credit.
There's no question that Ronald Reagan's actions secured his place as a strong advocate of the EITC.