In this article, I review the most prominent provision of the federal income tax code that targets low-income tax filers, the Earned Income Tax Credit (EITC), as well as the structurally similar Child Tax Credit and Additional Child Tax Credit. I discuss the programs’ goals: distributional, promoting work, and limiting administrative and compliance costs. The article reviews the history of the programs, the predicted economic effects, and what is known about program impacts and distributional consequences. I conclude that the EITC effectively targets low-income households and is efficient in reducing poverty while encouraging work and that increases in after-tax household incomes lead to improved outcomes over the life course for children of those households. I propose reforms to the program, including policies that expand the generosity of the credit and increase take-up, as well as structural reforms that include spreading benefits throughout the year and reducing reliance on paid tax preparers.
CITATION STYLE
Hoynes, H. (2019). The Earned Income Tax Credit. Annals of the American Academy of Political and Social Science, 686(1), 180–203. https://doi.org/10.1177/0002716219881621
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