Senior Director of Federal Tax Policy
As we celebrate the contributions of African Americans this month, we’d like to highlight a policy area where the Congressional Black Caucus (CBC) — created in 1971, a year after the first observance of Black History Month — has played a pivotal role and where many of its members are now working to build on past achievements. It’s the Earned Income Tax Credit (EITC), particularly the EITC for working people who aren’t raising minor children in their home but are working hard for low wages and trying to gain a foothold in the economy. The EITC for childless workers should be substantially larger, but without the CBC’s work, it wouldn’t even exist.
President Clinton’s first budget proposed both to expand the EITC for families with children and to create, for the first time, a small EITC for childless workers. During intense House-Senate negotiations over the package, the Senate proposed dropping the childless EITC. The CBC pushed back and made clear its members wouldn’t support the package as a whole without the childless EITC, and their work proved decisive.
“[T]he notion that some people carry that in this institution you should be seen and not heard is something we want to explode immediately,” said CBC Chairman Kweisi Mfume on the caucus’s strong stand on this and other key issues. By flexing its political muscle, the CBC helped ensure that the childless EITC provision became law. The CBC also played a central role that year in enacting important improvements to the Food Stamp Program known as the Mickey Leland Childhood Hunger Relief Act, named after the former congressman who had been both a CBC chairman and chairman of the House Select Committee on Hunger but then died tragically in a plane crash.
The EITC has a proven track record of boosting incomes and reducing poverty; along with the Child Tax Credit, it lifts more children out of poverty than any other program. This success reflects the effect of multiple expansions over several decades in the EITC for families with children.
By contrast, policymakers haven’t expanded the childless workers’ EITC since its creation in 1993. And because the childless workers’ EITC is so small, the federal tax code actually taxes more than 5 million childless adults aged 19-67 into or deeper into poverty; their EITC is too small to offset the federal income and payroll taxes they owe.
In response, many current members of Congress, including leading members of the CBC, are fighting to deliver a more robust EITC to childless adults.
Rep. Danny Davis, a long-time EITC champion, has introduced the Foster Opportunity EITC Act, with a childless workers’ EITC expansion as its centerpiece; Rep. Dwight Evans is a lead sponsor of the Working Families Tax Relief Act (WFTRA); Rep. Gwen Moore and Rep. Marcia Fudge recently introduced the Worker Relief and Credit Reform Act; and earlier this Congress, Rep. Bonnie Watson Coleman introduced the Cost-of-Living Refund Act of 2019. These bills, which numerous CBC members (and other House members) have co-sponsored, all would substantially expand the EITC for childless workers. Senators Cory Booker and Kamala Harris each have introduced and co-sponsored legislation in the Senate that would effectively do so as well.
The Davis bill’s childless EITC proposal, which is similar to the WFTRA’s, would raise the maximum EITC for childless workers from roughly $530 today to $2,000 and raise the income limit to qualify for the credit from about $16,000 for a single individual to $24,000. It would also expand the age range of childless workers eligible for the credit from 25-64 today to 19-67. The bill would boost the incomes of 19 million working childless adults, including 3.4 million African Americans.
To grasp the importance of such a change, consider a health aide who works full time at the federal minimum wage and earns $14,500, only slightly above the poverty line for a single individual (estimated at $13,340 in 2019). She now pays over $1,300 in combined federal income and payroll taxes (counting only the employee portion). Since she only receives a small EITC of $99, the tax code pushes her below the poverty line. The Davis bill would increase her EITC by more than $1,400, so she would no longer be taxed into poverty and would secure an important income boost.