ERIC Number: ED471614
Record Type: Non-Journal
Publication Date: 2003
Helping Working Families: The Earned Income Tax Credit.
Hoffman, Saul D.; Seidman, Laurence S.
The impact of the Earned Income Tax Credit (EITC) on working families was analyzed. The analysis established that the EITC is, on balance, a highly effective program that meets its primary objectives well. The following benefits of the EITC were identified: (1) it reduced the poverty rate in 1999 by an estimated 1.5 percentage points; (2) it is preferable to the minimum wage as an income-transfer policy for poor households; and (3) it has increased many groups' labor force participation. These emerging problems with the EITC were identified: (1) it penalizes work among workers with incomes at the high end of the EITC schedule; (2) it imposes substantial financial marriage penalties; (3) it still leaves larger families with low-wage workers in poverty; and (4) its eligibility criteria are needlessly complex. The following reforms were proposed: (1) reduce EITC's current phase-out rate for families with two or more children from 21.06% to 15.98%; (2) establish a more generous EITC schedule for married couples; and (3) provide a more generous rate schedule for families with three or more children. (Sixty-two tables/figures are included. Appendixes present information about the EITC's algebra, effect on labor supply, cost-effectiveness, and variations on proposed EITC reform. The bibliography lists 85 references.) (MN)
Descriptors: Compliance (Legal), Cost Effectiveness, Economic Impact, Eligibility, Employed Parents, Employment Patterns, Family Financial Resources, Family Income, Family Status, Labor Market, Labor Supply, Marriage, Minimum Wage, Policy Formation, Poverty, Program Effectiveness, Public Policy, Salary Wage Differentials, Tax Credits, Taxes, Welfare Recipients, Working Poor
W.E. Upjohn Institute for Employment Research, 300 South Westnedge Avenue, Kalamazoo, MI 49007. Tel: 616-343-4330; Fax: 616-343-7310; e-mail: firstname.lastname@example.org; Web site: http://www.upjohninst.org (ISBN-0-88099-254-9 (cloth) $36; ISBN-0-88099-253-0-9 (paper) $18).
Publication Type: Books; Reports - Research
Education Level: N/A
Authoring Institution: Upjohn (W.E.) Inst. for Employment Research, Kalamazoo, MI.
Identifiers - Laws, Policies, & Programs: Earned Income Tax Credit; Temporary Assistance for Needy Families