Director of Federal Tax Policy
With Labor Day approaching, here’s one way the President and Congress can show their support for the millions of Americans working for relatively low wages: save key provisions of the Earned Income Tax Credit (EITC) and Child Tax Credit (CTC) scheduled to expire at the end of 2017. The expected push this fall to permanently extend several corporate tax breaks shouldn’t take precedence over saving critical components of these pro-work tax credits.
Our new paper details the wide range of low-wage workers facing lower living standards if policymakers fail to extend the EITC and CTC provisions, from construction workers to child care providers, retail salespeople, and nursing home aides (see graphic). It also includes state-by-state estimates of how many workers in selected occupations would lose out if these provisions expire.
The EITC and the CTC have long enjoyed bipartisan support because they reward and encourage work for low- and moderate-income workers, helping them make ends meet and provide the basics for their children. In fact, the EITC “may ultimately be judged one of the most successful labor market innovations in U.S. history,” according to the University of California’s Hilary Hoynes. Moreover, there’s growing evidence that income from these tax credits leads to better maternal and infant health, improved school performance, higher college enrollment, and increased work effort and earnings in adulthood.
Policymakers should also fill the glaring hole in the EITC for childless adults and non-custodial parents. Partly because their EITC is small or nonexistent, these workers are the sole group that the federal tax system taxes into (or deeper into) poverty. Fixing the shortcomings in the childless workers’ EITC, as both the President and House Ways and Means Committee Chairman Paul Ryan have proposed, would help a similarly broad range of workers, our paper shows.