THE EARNED INCOME TAX CREDIT: THE POVERTY PROGRAM THAT IS TOO POPULAR

The Revenue Reconciliation Act of 1993 expanded the earned income tax credit (EITC) for the 7th time in less than 20 years. While this change met with a great deal of political success, the program's effectiveness has not been rigorously evaluated. The only threat to the EITC's recent expa...

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Bibliographic Details
Published in:The Tax lawyer 1995-01, Vol.48 (2), p.435-469
Main Author: Caballero, Michael J.
Format: Article
Language:English
Subjects:
Earned income
Earned income tax credit
Income taxes
Minimum wage
Negative income taxes
OBRA 1993-US
Poverty
Regressive taxation
Social security tax
Social security taxes
Tax attorneys
Tax benefits
Tax credits
Taxpaying
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Summary:The Revenue Reconciliation Act of 1993 expanded the earned income tax credit (EITC) for the 7th time in less than 20 years. While this change met with a great deal of political success, the program's effectiveness has not been rigorously evaluated. The only threat to the EITC's recent expansion was a concern about the expense the program carried in a time of overall revenue conservation. The program rode its political popularity through the legislative process and into enacted law. Instead of continuing the unchallenged expansion of the EITC, the program should be returned to its original purpose: alleviating the burden of Social Security taxes on low-income workers. By abandoning the indirect approach of the EITC, a number of the problems it has created can be solved.
ISSN:0040-005X
2329-6089