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Building Momentum for Vital Tax Credit Provisions

Democratic lawmakers announced a series of important bills yesterday that would reward work and reduce poverty for low-income workers.

Senators Sherrod Brown (D-OH), a Finance Committee member, and Richard Durbin (D-IL), the Senate Minority Whip, announced the Working Families Tax Relief Act, which expands the Earned Income Tax Credit (EITC) for “childless workers” — adults without children and non-custodial parents — and makes permanent key provisions of the EITC and Child Tax Credit (CTC) that are set to expire at the end of 2017. Most Democratic senators, including Finance Committee Ranking Member Ron Wyden (D-OR), support the bill.

In the House, Rep. Richard Neal (D-MA), a Ways and Means Committee member, and 51 co-sponsors introduced the Earned Income Tax Credit Improvement and Simplification Act, which also expands the EITC for childless workers and makes permanent the key EITC provisions. Rep. Rosa DeLauro (D-CT) also announced a bill to make the CTC provision permanent.

By making permanent the key provisions of the EITC and CTC and boosting the EITC for childless workers, these bills advance crucial priorities for this Congress.

The EITC and CTC encourage work, reduce poverty, and support children’s development, research finds. Unless policymakers act, key features of the EITC and CTC will expire at the end of 2017, causing millions of low-income working families to lose all or part of their credits. More than 16 million people in low- and modest-income working families, including 8 million children, would fall into — or deeper into — poverty in 2018. A single mother with two children who works full time at the minimum wage (and earns $14,500) would lose her entire CTC of $1,725, for example. The bills announced yesterday would ensure that working families continue to receive the EITC’s and CTC’s far-reaching benefits.

The bills also would strengthen the EITC by expanding it for low-income childless workers, who currently receive little or nothing from the EITC and are the lone group the federal government taxes into (or deeper into) poverty. The proposals would significantly increase the maximum credit for childless workers from around $500 to roughly $1,400 and double (from 7.65 percent to 15.3 percent) the rate at which the credit phases in with rising earnings. The proposals also would allow childless adults ages 21 to 25 to qualify for the EITC. The congressional proposals are part of a growing bipartisan consensus to expand the EITC for childless workers. House Ways and Means Committee Chairman Paul Ryan (R-WI) and President Obama have both proposed similar — though somewhat less generous — expansions (see figure).


For more on these vital tax credits, see our recently updated resources: