Tax Credits for Working Families

News Round-Up: July 28, 2014

July 28th, 2014

Here are some highlights from last week’s news on family tax credit issues. Remember – you can also track news coverage throughout the week by visiting our RSS feed, where you can filter news by a specific credit and/or state.

Ideas From The Right: Rep. Paul Ryan Proposes Increase to EITC for Childless Workers

July 24th, 2014

This issue is the latest in our new commentary series, “Ideas From The Right: Conservative Approaches to Tax Credits for Working Families,” which highlights new proposals from conservative policymakers and thought leaders on how to improve tax incentives like the Earned Income Tax Credit (EITC) and Child Tax Credit. Ideas From The Right seeks to draw attention to the growing support for these credits at both the federal and state level while sparking discussion on the merits of different approaches and opportunities for consensus among conservatives and progressives.This commentary is open for discussion on our blog.

During a policy discussion at the American Enterprise Institute (AEI) this morning, House Budget Committee Chairman Paul Ryan unveiled a new plan to fight poverty and expand opportunity in America, which included increasing the federal EITC for childless workers and noncustodial parents.

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Ideas From The Right: An Exclusive Interview With Brookings’s Ron Haskins

July 23rd, 2014

This issue is the latest in our new commentary series, “Ideas From The Right: Conservative Approaches to Tax Credits for Working Families,” designed to highlight new proposals from conservative policymakers and thought leaders on how to improve tax incentives like the Earned Income Tax Credit and Child Tax Credit. Ideas From The Right seeks to draw attention to the growing support for these credits at both the federal and state level while sparking discussion on the merits of different approaches and opportunities for consensus among conservatives and progressives.

In this issue, Lauren Pescatore of Tax Credits for Working Families interviews Ron Haskins, former White House and Congressional advisor on welfare issues, current co-director of the Center on Children and Families, Budgeting for National Priorities and senior fellow, economic studies at the Brookings Institution and senior consultant at the Annie E. Casey Foundation.

 

RonHaskinsWhy do you think tax credits for working families have recently catapulted to the forefront of so many conservative platforms?

Republicans have a long history of supporting the EITC. But a number of factors play into this recent surge in support – one of which is the current minimum wage vs. EITC debate. Republicans favor the EITC, especially in the midst of a minimum wage debate because it is much better targeted and arguably imposes less of a burden on the economy.

 

Will this be a contested issue among conservatives?

Definitely. Many conservatives believe the tax code should be used primarily to collect revenue. There are those who share Mitt Romney’s stance on the so-called “47 percenters” and believe tax credits, especially those that are refundable, do quite the opposite. Credit refundability will be a strong point of contention among Republican lawmakers.

The amount of EITC payments made in error is also a likely platform for conservative opponents of the credit. I think it’s wrong to say “fraud,” because I think most EITC overpayments are truly error. But some Republican leaders may turn to this issue as a reason to oppose any increases to the credit. There are not many federal programs with an error rate as high as the EITC.

 

How would improving work incentives like the Child Tax Credit and Earned Income Tax Credit help policymakers advance conservative goals?

Compared to other programs that are intended to help low-income families, these credits have “Republican” written all over them. They embrace conservative ideology by promoting hard work and stable families – these credits are intended to encourage work, can only be collected by those who are currently working and offer support for workers raising children.

In addition, we’ve seen a shift in conservative policy to target support towards the success of younger minority groups, young males in particular. There’s evidence that credits like the EITC encourage these young men to work. The hope is that an expanded EITC for childless workers would also help them continue to be successful throughout their careers and advance to higher-paying jobs. This is a group with potential to become self-sufficient middle-class workers, and that’s where we need to be focusing.

 

So, would you recommend lowering the age requirement to collect the EITC so that more young men are eligible for the credit?

I would. I’d be tempted to even recommend bringing the age requirement down to 19, but the problem with that is then you get students. A kid going to community college because that’s all he can afford, trying to get a technical degree, that’s a kid you want to help. But a middle-class student going to a four year college, that’s not who we need to focus on. So, lowering the age requirement for the EITC could get tricky.

 

Where do you see areas of opportunity for bipartisan collaboration around some of these proposals?

Of the various issues that are on the table right now, increasing the EITC for childless workers and noncustodial parents has a decent chance of garnering bipartisan support. The President has proposed an increased credit for these workers and Paul Ryan, Marco Rubio and Mike Lee have all expressed their support for an EITC reform that helps this group.

 

What obstacles do you foresee as possibly hindering these proposals from becoming law?

As I mentioned before, a standalone bill to improve the EITC or Child Tax Credit could have a pretty good chance of bipartisan endorsement. But I wouldn’t be surprised if a credit expansion gets tied into an overall tax reform package, either from the Democrats or the Republicans, and ultimately gets bogged down by a number of other issues the opposing party doesn’t support.

Lauren Pescatore Posted in Child Tax Credit, Earned Income Tax Credit, Recent Updates | Comments Off

News Round-Up: July 21, 2014

July 21st, 2014

Here are some highlights from last week’s news on family tax credit issues. Remember – you can also track news coverage throughout the week by visiting our RSS feed, where you can filter news by a specific credit and/or state.

  • A bill from Rep. Cory Gardner (R-Colo.), H.R. 5070, seeks to eliminate improper Earned Income Tax Credit (EITC) payments by increasing penalties and expanding IRS authority, and use the savings to expand the credit. The bill would authorize a study to improve the efficiency and effectiveness of the EITC while reducing improper payments. (KRAI-FM, Rep. Gardner)

Introducing: Ideas From The Right – Conservative Approaches to Tax Credits for Working Families

July 17th, 2014

Today marks the launch of our new commentary series, Ideas From The Right: Conservative Approaches to Tax Credits for Working Families. This series is designed to highlight new proposals from conservative policymakers and thought leaders on how to improve tax credits for working families like the Earned Income Tax Credit and Child Tax Credit. Ideas From The Right seeks to draw attention to the growing support for these credits at both the federal and state level while sparking discussion on the merits of different approaches and opportunities for consensus among conservatives and progressives.

While tax credits for working families have long enjoyed bipartisan endorsement, the past year has boasted a surge of conservative support in particular – in the form of separate proposals from Senator Mike Lee (R-Utah) and Congresswoman Lynn Jenkins (R-Kansas) to expand the federal Child Tax Credit, a push from Senator Marco Rubio for an EITC-like work support and resounding support from Representative Paul Ryan, and most recently a collection of essays from conservative thought leaders on policies to promote a thriving middle class that included proposals to expand the EITC and Child Tax Credit.

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Lauren Pescatore Posted in Child and Dependent Care Tax Credit, Child Tax Credit, Earned Income Tax Credit, Recent Updates | Comments Off

News Round-Up: July 14, 2014

July 14th, 2014

Here are some highlights from last week’s news on family tax credit issues. Remember – you can also track news coverage throughout the week by visiting our RSS feed, where you can filter news by a specific credit and/or state.

  • Senators Kirsten Gillibrand (D-N.Y.), Patty Murray (D-Wash.), Jeanne Shaheen (D-N.H.) and Barbara Boxer (D-Calif.) introduced a bill that would more than double the maximum federal Child and Dependent Care Credit to up to $8,000 for one child and $16,000 for two or more children. The bill would also make the credit refundable, making it far more valuable to people with very low incomes. (The Huffington Post, Office of Rep. Shaheen)

  • Brookings fellow Richard V. Reeves noted that the United Kingdom’s “Universal Credit” has sparked significant interest among lawmakers in the U.S., but argued that such a credit is unnecessary here, thanks to the relative generosity of our existing work supports like the Earned Income Tax Credit (EITC). (The Brookings Institution)

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Building a Better EITC

July 8th, 2014

This post was written by Isabel Sawhill, co-director and Quentin Karpilow, senior research assistant at the Center on Children and Families at the Brookings Institution. It first appeared as exclusive commentary for the Spotlight on Poverty and Opportunity blog. We are cross-posting with their permission.

The Earned Income Tax Credit (EITC) is one of the federal government’s most effective antipoverty policies. In 2012 alone, it lifted about 6.5 million people out of poverty, including roughly 3.3 million children. Designed to incentivize work, the program has been hugely successful in boosting employment rates among poor single mothers. And these accomplishments have led to broad bipartisan support from figures such as Paul Ryan, Greg Mankiw, and Patty Murray.

However, the EITC still falls short of its potential, in large part because it offers little to no support to many of the workers who need it most. As such, it’s encouraging that President Obama chose to make expanding the EITC a priority in his fiscal year 2015 budget. Still, we think there’s opportunity for more robust reforms that further broaden the reach of this important program—at no additional cost to taxpayers.

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Lauren Pescatore Posted in Earned Income Tax Credit, Recent Updates | Comments Off

News Round-Up: July 7, 2014

July 7th, 2014

Here are some highlights from last week’s news on family tax credit issues. Remember – you can also track news coverage throughout the week by visiting our RSS feed, where you can filter news by a specific credit and/or state.

Thoughts from Congress on the Child Tax Credit Improvement Act

July 3rd, 2014

On June 24th, 2014, the House Ways and Means Committee marked up HR4953, The Child Tax Credit Improvement Act of 2014. Because this bill will proceed to the House floor for a vote, we are offering more extended analysis. We have already posted the sponsor’s introductory comments, and an analysis by Elaine Maag of the Tax Policy Center. Today we are sharing commentary from other members of the Ways and Means Committee on the bill.

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Lauren Pescatore Posted in Child Tax Credit, Recent Updates | Comments Off

Misguided Expansion of the Child Tax Credit

July 1st, 2014

This post was authored by Elaine Maag of the Tax Policy Center and originally appeared on their TaxVox blog. We are re-posting with her permission. 

Congresswoman Lynn Jenkins (R-KN) wants to expand the child tax credit (CTC) with the Child Tax Credit Improvement Act of 2014. She’s on the right track, but her proposed expansions are ill-targeted and fail to address the credit’s biggest looming issue: the change in refundability that will hit the poorest recipients after 2017.

Jenkins’s plan would index the credit for inflation and extend the credit to higher-income married couples­­­. There are better alternatives. A much cheaper option would simply continue today’s relatively generous version of the program after 2017. An even better solution would make the credit refundable for all families, starting at the first dollar of earnings. Such a change would cost about as much as Jenkins’s plan but would target assistance to the neediest workers rather than higher-income households, as she would.

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Lauren Pescatore Posted in Child Tax Credit, Recent Updates | Comments Off

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