Moving Forward With the Earned Income Tax Credit and Child Tax Credit

Abstract

Policymakers grapple with the related issues of unequal incomes, relatively poor health, education, and economic outcomes for low-income children, and hardship among low- and moderate-income families. Refundable tax credits provide substantial support and relief to many. This analysis details who benefits from the earned income tax credit (EITC) and the child tax credit (CTC) and four large-scale tax credit proposals that would provide substantial and ongoing benefits through these or similar credits. Broadly, proposals focused on children exclude childless adults and the elderly, and proposals focused on work exclude nonworkers, including most of the elderly, but include many workers with children.

Food Insufficiency Following Discontinuation of Monthly Child Tax Credit Payments Among Lower-Income US Households

“…The 2019 report, A Roadmap to Reducing Child Poverty , found that among many potential policy solutions, a $250 per child per month ($3000 per year) child allowance policy—similar in structure to the 2021 eCTC reforms—was likely to make the biggest effect on child poverty . These types of monthly payments are also supported by evidence in the economics literature that suggests that compared with lump-sum disbursements, periodic payments may help to reduce household income volatility …”

“…32 These types of monthly payments are also supported by evidence in the economics literature that suggests that compared with lump-sum disbursements, periodic payments may help to reduce household income volatility. 33 , 34 , 35 …”

“…These results are particularly relevant to the policy debate around the structure of the CTC. Prior to the 2021 expansion, approximately 25 million children in low-income families did not receive the full per-child CTC because their parents lacked earnings or had earnings that were too low . The 2021 reforms made the eCTC fully refundable and removed the minimum income requirement, meaning that they did not exclude no- and low-income households from being eligible for the full credit benefit (regardless of the dollar amount of taxes owed).…”

Are Universal and Guaranteed Basic Income Programs Effective in the United States? A Review

“…Overall, TANF does little to alleviate poverty and adversity . Earned Income Tax Credit and Child Tax Credit also assist families by reducing the amount of taxes owed based on income, marital status, and number of children (Maag & Airi, 2020). The Center on Budget and Policy Priorities (2023) reported in 2018, Earned Income Tax Credit helped 5.6 million individuals to rise above the poverty line, including 3 million children.…”

¿Es plausible introducir en España un complemento salarial en el IRPF? Una valoración a partir de un ejercicio de simulación

“…Una revisión reciente de la evidencia empírica puede encontrarse enAbbas (2020) o enLaun (2019). Este último trabajo tiene el atractivo adicional de centrarse en la presentación de la evaluación económica de determinados programas europeos habitualmente menos conocidos.11 En este punto, parece que una mayor periodicidad de los pagos, pues en el caso norteamericano es un único pago anual, mejoraría la situación financiera de las familias(Maag et al, 2021).12 A mayor abundamiento, Dowd y Horowitz (2011) identifican que una mayoría de beneficiarios del EITC (61 %) entre 1989 y 2006 lo fueron por un periodo menor a dos años debido a que experimentaron alzas salariales.En consecuencia, una gran mayoría de perceptores del EITC deviene a posteriori contribuyente neto del programa, por lo que el propio coste neto de aquel sería menor que el de otros programas asistenciales (respectivamente,Dowd y Horowitz, 2008; Bastian y Jones, 2021).…”