Childless adults are the only group that the federal tax code taxes into poverty, our new paper explains, primarily because they’re the only group of low-income workers largely excluded from the Earned Income Tax Credit. The EITC for childless adults is too small — or, for many, non-existent — to offset their income taxes and the employee share of their payroll taxes.
President Obama and House Speaker Paul Ryan have nearly identical EITC expansion proposals that would take a big step towards ensuring that the federal tax code taxes no childless wage earners into poverty. More robust EITC proposals from Senate Finance Committee member Sherrod Brown and House Ways and Means Committee member Rep. Richard Neal would essentially accomplish that goal.
The graphic shows how the proposals would affect a childless worker with wages at the poverty line.
All four proposals would lower the eligibility age for the childless workers’ EITC from 25 to 21, phase in the credit more quickly as earnings rise, boost the maximum credit, and expand eligibility to include more low-wage childless adults.
The principle that we shouldn’t tax people into poverty resonates across the political spectrum. Childless adults are the lone group that the federal tax code fails on this principle. President Obama and Speaker Ryan both have called for addressing this issue, and the Brown and Neal proposals show how policymakers could accomplish it. These developments signal an opportunity for a significant anti-poverty advance in 2016, and the President and Congress should seize it.