Expanding the Earned Income Tax Credit for Childless Workers

Kayla Kitson, U.S. Poverty Campaigns Intern
June 10, 2014

President Obama recently called for an expansion of the Earned Income Tax Credit (EITC) for childless workers, the only group that is currently taxed into poverty.  The EITC for taxpayers in this group is rarely sufficient to offset their tax liabilities, so they may end up owing federal income taxes even if they are living below the poverty line.  Additionally, the EITC is unavailable for single workers under the age of 25.  The President’s proposal, which would double the amount of the EITC for childless workers and lower the eligibility age to 21, is estimated to lift approximately half a million people out of poverty and to reduce the depth of poverty for 10 million more.  Some members of Congress have introduced legislation that make would make the credit available to workers between the ages of 21 and 25 and increase the amount of the credit for all childless workers (see the H.R.2116 – the Earned Income Tax Credit Improvement and Simplification Act of 2013 and S.836 – the Working Families Tax Relief Act of 2013). 

New York State and New York City have both piloted expansions of EITC-like tax credits to childless adults.  Researchers highlighted findings about these pilots at the Welfare Research and Evaluation Conference, sponsored by the U.S. Department of Health and Human Services, on May 29.  New York State, in an attempt to address the issues faced by non-custodial parents (a group included in the “childless workers” category for EITC) created the Strengthening Families Through Stronger Fathers Initiative in 2006.  As a component of the initiative, the state made available a refundable tax credit, similar in structure to the EITC, to non-custodial parents who paid their child support obligations in full.  A study of the program estimated that the tax credit increased the percentage of non-custodial parents who paid their child support in full by 1.1 percentage points, equivalent to encouraging approximately 2,300 additional parents to pay their obligations in full each year. 

New York City’s Paycheck Plus demonstration provides a generous EITC-like tax credit for childless workers age 21 and up.  The tax credit is available to workers earning above than the EITC income thresholds so that more lower-income workers can benefit.  The pilot program specifically targets non-custodial parents, ex-offenders, and people with no earnings.  Results from a random assignment evaluation of the program are scheduled to be released in 2017, and will report on outcomes related to earnings, child support compliance, criminal justice involvement, and family formation.

It is critical that we build on the momentum of these state and local efforts and push for an expansion of the EITC to more low-income childless workers.  Increasing benefits for non-custodial parents, in particular, will assist not only the parent but also the children who may benefit from child support.  President Obama’s EITC expansion would help 13.5 million Americans, including 1.5 million non-custodial parents, and would lift 500,000 hardworking Americans out of poverty.

Additionally, many low-income young adult workers can be assisted by lowering the eligibility age from 25 to 21.  This group may include economically disadvantaged former foster youth who have no parental support and generally have poorer outcomes as adults.   It has been suggested that expanding the EITC for single workers can build social capital, and in doing so it can also increase social mobility.  Expansion of the EITC has the potential to alleviate poverty while also promoting work and upward mobility.

This month RESULTS volunteers are engaging others in their communities to take action to protect and strengthen tax credits for low-income Americans, while hundreds converge in Washington DC during the RESULTS International Conference.  The June Action has a full list of helpful tips and resources to help you learn more and take action.