Our Seventh Idea
I promised you a policy idea each of the last eight weeks of the campaign: 8 Ideas in the Eighth!With just 11 days left, it is time for Idea #7.
We should expand the Earned Income Tax Credit (EITC), one of the United States’ most impressive and successful anti-poverty programs.
This wage subsidy is highly regarded – among Democrats and Republican alike – in part because it encourages work. The benefit rises with earnings until it reaches a plateau, then gradually phases out as earnings continue to rise. The EITC lifted over 6 million Americans out of poverty in 2012. About half of them were children.
The EITC could do so much more with three expansions. First, we should expand the benefit for childless workers. While the EITC provides more than $3,000 on average to low-income working families with children, the benefit for low-wage workers who have no children is very little, averaging just $270. (A full-time, minimum wage worker with no children is not currently eligible for EITC.)
In addition, we should lower the EITC age threshold for childless workers, some of whom are actually noncustodial parents. Today, a childless worker younger than 25 is not eligible for EITC. That threshold should be lowered to 21.
Finally, the maximum tax credit available to childless workers should rise from its current level of about $500 to at least double that amount. Research shows that the small amount of money goes toward car repairs, education and basic household needs.
Under today’s guidelines, many of the 7 million low-wage, childless workers can be taxed into or deeper into poverty. The Obama Administration proposed these EITC expansions in January, estimating that they would lift half a million people above the poverty line, while reducing the depth of poverty for another 10.1 million people.
The expansions of the Earned Income Tax Credit would cost roughly $60 billion over 10 years. The Republican and Democratic proposals have different ideas about how to find this money in the current budget. I am not wedded to either, but would like to work across party lines, if elected, to find a path forward on this critical need.