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Why the EITC Is No Substitute for the Safety Net


The Earned Income Tax Credit is a critically important and highly effective part of the safety net, but it can’t — and wasn’t meant to — stand alone as our answer to poverty, according to our new commentary.  Here’s the opening:

House Budget Committee Chair Paul Ryan’s recent report on safety net programs rightly praised the Earned Income Tax Credit (EITC) for reducing poverty and promoting work.  But, Ryan’s report criticizes much of the rest of the safety net.  And, over the past several years, Chairman Ryan’s budget plans have targeted low-income programs such as SNAP (formerly food stamps) and Medicaid for extremely deep cuts.  While it’s heartening to hear Chairman Ryan trumpet the EITC’s success, the EITC alone can’t do what’s needed to ameliorate poverty and hardship.

The things that the EITC — and its sibling the Child Tax Credit, which helps offset the cost of raising children — can’t do without other safety net programs include:

  • help people who are out of work or can’t work;
  • help families get health care;
  • help families on a monthly basis;
  • serve as an effective automatic stabilizer for the economy in recessions; and
  • keep large numbers of people out of “deep poverty,” or above half the poverty line.


As the graph shows, while the EITC and Child Tax Credit keep several million people out of deep poverty, other programs targeted on low-income individuals — such as SNAP (formerly food stamps) and Supplemental Security Income — do much more.  In fact, roughly 70 to 80 percent of the people that the safety net as a whole lifted out of deep poverty in 2010 would have remained in deep poverty if the EITC and CTC were the only forms of income-tested assistance for very poor families.