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Expansions of the Earned Income Tax Credit and Child Tax Credit Would Benefit Millions of Asian Americans

The Earned Income Tax Credit (EITC) and Child Tax Credit go to millions of low- and moderate-income working families each year. Studies show that the EITC increases employment, raises incomes, and reduces poverty. Research also links income from these tax credits to a series of gains for children — better infant health, improved school performance, higher college enrollment, and increases in earnings in adulthood. As a result, the tax credits appear to reduce poverty not only in the near term but also in the next generation.

A number of legislative proposals would make the EITC or the Child Tax Credit — including its refundable component — more effective. For example, the Working Families Tax Relief Act — introduced by Senators Sherrod Brown, Michael Bennet, Richard Durbin, and Ron Wyden and 42 co-sponsors in the Senate and by Representatives Dan Kildee and Dwight Evans in the House — would both make the Child Tax Credit fully refundable (so it reaches children in the poorest families) and boost the EITC. That legislation would:

  • Boost the incomes of an estimated 46 million households — including 2 million Asian American households.
  • Substantially expand both the EITC for families with children and the EITC for workers not raising a child at home. The expansions include broadening the age range of workers eligible for the credit from 25-64 today to 19-67, a provision that would support young workers, especially those who lack a college degree.

The Working Families Tax Relief Act would have large anti-poverty effects. It would:

  • Reduce the overall poverty rate (using the Supplemental Poverty Measure, which analysts favor) from 14 percent to 12 percent — a 15-percent reduction.
  • Reduce the Asian American poverty rate from 14 percent to 13 percent, an 8-percent reduction.
  • Lower the overall child poverty rate from 15 percent to 11 percent, a 28-percent reduction.
  • And shrink the Asian American child poverty rate from 12 percent to 11 percent, a 15-percent reduction.

A related bill from the Ways and Means Committee — the Economic Mobility Act — also contains some of these provisions, though on a temporary basis; it would expand the EITC for childless workers and enlarge the Child Tax Credit, including making it fully refundable, for the next two years. Its expansion of the EITC would raise the after-tax incomes of 16 million childless adults, of whom about 700,000 are Asian Americans, while its Child Tax Credit changes would benefit more than 42 million children under age 17 — including 2 million Asian American children.

TABLE 1
Asian American Households Benefiting from the Working Families Tax Relief Act, by State
State Number of Asian American Households
Total U.S. 2,216,000  
Alabama 7,600  
Alaska 7,600  
Arizona 27,000  
Arkansas 5,400  
California 670,000  
Colorado 23,000  
Connecticut 19,000  
Delaware 4,400  
Dist. of Columbia 2,200  
Florida 76,000  
Georgia 52,000  
Hawaii 59,000  
Idaho 2,800  
Illinois 84,000  
Indiana 19,000  
Iowa 11,000  
Kansas 13,000  
Kentucky 9,500  
Louisiana 12,000  
Maine 2,000  
Maryland 43,000  
Massachusetts 54,000  
Michigan 35,000  
Minnesota 42,000  
Mississippi 3,900  
Missouri 16,000  
Montana 1,600  
Nebraska 6,700  
Nevada 32,000  
New Hampshire 4,800  
New Jersey 92,000  
New Mexico 4,200  
New York 243,000  
North Carolina 41,000  
North Dakota 1,400  
Ohio 31,000  
Oklahoma 11,000  
Oregon 22,000  
Pennsylvania 56,000  
Rhode Island 5,200  
South Carolina 11,000  
South Dakota 2,200  
Tennessee 16,000  
Texas 162,000  
Utah 10,000  
Vermont 1,700  
Virginia 62,000  
Washington 74,000  
West Virginia 2,000  
Wisconsin 22,000  
Wyoming 500  

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

September 18, 2019