The Earned Income Tax Credit (EITC) is widely recognized as one of the most effective anti-poverty, pro-work investments we can make. Essentially, it allows low- to moderate-income workers to keep more of their hard-earned dollars that they can use to pay for the basic cost of living.
While this credit has been tremendously successful in helping to lift families and children out of poverty, the policy largely excludes hundreds of thousands of childless workers. Families with children receive a much larger credit than workers without qualifying children. In 2015, the maximum credit for families with one child is $3,359, while the maximum credit for families with three or more children is $6,242. In contrast, childless workers can receive a maximum credit of only $503 and it phases out at much lower incomes.
This is a missed opportunity. Childless workers are an essential part of our economy, and they should not be getting taxed into poverty. A little extra earning means childless workers can save up to deal with an unexpected expense, like an auto-repair without being thrown into a state of crisis; or pay down debt, take classes in the hopes of qualifying for more gainful employment; or put some money away in preparation for starting a family one day. These are all worthwhile investments in the quality of life of working people and the health of local and state economies.
Much of the focus this election from both sides of the aisle has been on the needs of middle class and low-wage earners. There are about 249,000 workers in Michigan alone who could benefit from EITC if it were expanded to childless workers. We need to capitalize on this moment and push to expand this widely supported policy to benefit more workers. The EITC has been a proven effective tool that encourages and rewards work, and lifts families out of poverty. Its effectiveness as a pro-work, anti-poverty measure has been hailed by economists and elected officials of all political stripes, from Presidents Ronald Reagan to Barack Obama.
In the coming months, we’ll be working to encourage the new Congress and president to focus on boosting the EITC to ensure that no one who works for a living is living in poverty.