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Working Families Tax Relief Act Would Boost Incomes Across America

August 27, 2019 at 10:00 AM

As we honor workers by celebrating Labor Day, we should remember that millions who do important jobs — such as serving store customers, making restaurant meals, delivering packages, and caring for the elderly in nursing homes — work for low pay, have little control over their work schedules, and lack paid vacations or even paid sick days. They deserve better.

That’s among the reasons why policymakers should enact the Working Families Tax Relief Act, which we estimate would raise the incomes of roughly 46 million households by greatly expanding the Earned Income Tax Credit (EITC) and Child Tax Credit. The top occupations that would benefit from this legislation overwhelmingly come from the service sector or are related to health care or other forms of care, but many workers in other occupations would also benefit (see table).

Top Occupations Benefiting From Working Families Tax Relief Act
Occupation Workers
Cashiers 1,873,000
Retail salespersons 1,323,000
Nursing, psychiatric, and home health aides 1,165,000
Truck drivers 1,120,000
Cooks 1,115,000
Janitors and building cleaners 1,100,000
Waiters and waitresses 1,090,000
Laborers and freight, stock, and material movers 1,038,000
First-line supervisors of retail sales workers 990,000
Elementary and middle school teachers 966,000
Customer service representatives 942,000
Maids and housekeeping cleaners 897,000
Personal and home care aides 870,000
Stock clerks and order filers 764,000
Secretaries and administrative assistants 642,000

Source: CBPP estimates based on 2015-2017 American Community Survey data and March 2018 Current Population Survey data.

The map below shows the top occupations in each state that would benefit.

Introduced in the Senate by Sherrod Brown, Michael Bennet, Richard Durbin, and Ron Wyden (with 42 co-sponsors) and in the House by Dan Kildee and Dwight Evans, the Working Families Tax Relief Act would:

  • Boost the EITC for families with children by roughly 25 percent;
  • Strengthen the very small EITC for workers not raising children in their homes — the sole group that the federal tax code now taxes into, or deeper into, poverty;
  • Make the Child Tax Credit fully refundable so that children in lower-income households (including those with little or no income) could benefit fully from it; and
  • Create a larger, fully refundable Young Child Tax Credit for children under age 6.

The House Ways and Means Committee sought to make a down payment on these improvements last month by passing Chairman Richard Neal’s Economic Mobility Act, which would expand the EITC for childless adults and make the Child Tax Credit fully refundable in 2019 and 2020.

To see the difference that the Working Families Tax Relief Act could make for millions of hardworking people, consider a mother of two children, a 4-year-old and a 7-year-old, who makes $20,000 as a home health aide. The bill would raise her Child Tax Credit by $2,210 and her EITC by about $1,460, for a combined gain of about $3,670. Or consider a fast-food cook who works full time at the federal minimum wage and earns $14,500, only slightly above the poverty line. He now pays more than $1,250 in combined federal income and payroll taxes, which push him below the poverty line. The bill would increase his EITC by about $1,530, so he’d no longer be taxed into poverty.

Reflecting the diversity of the nation’s workers, those receiving an income boost would include 24 million white households, 9 million Latino households, 8 million Black households, 2 million Asian households, and roughly half a million American Indian and Alaska Native households. White households constitute the greatest number of those benefiting because they’re the largest share of the population, but the bill would help a greater share of Black, Latino, and other households of color because they are over-represented in low-wage jobs due to long-standing racial barriers to economic opportunity. Thus, the Working Families Tax Relief Act would not only raise workers’ pay but also reduce racial gaps in income.


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