Senate shouldn’t hesitate on Earned Income Tax Credit

For the first time this spring, millions of childless lower-income working people are seeing bigger tax refunds than ever before thanks to the expansion of the Earned Income Tax Credit (EITC), passed into law by the historic American Rescue Plan. But unfortunately, this is only temporary.

For one year, the American Rescue Plan updated the EITC, increasing the number of working people it’s able to reach, tripling the maximum benefit to make it more impactful, as well as increasing the cap on earnings to include workers making just above $10 per hour in a full-time job. 

And now, at the very moment working folks need support the most to keep up with skyrocketing costs, the Senate is hesitating to extend the expanded EITC. 

While legislators have called for a permanent extension to the Child Tax Credit (CTC) expansion to aid working families, policymakers seem to have largely forgotten about the low-income workers who are only just now seeing the benefit of the expanded EITC. President Biden’s fiscal year 2023 budget proposal mentions the CTC repeatedly, but only includes a single mention of the EITC. 

The increased CTC and advance payments provided stability, lifted millions of children out of poverty, and helped families afford food on the table, a roof over their heads and care for their children. And advocates and policymakers are rightfully fighting to renew the expansion and bring some stability back to the lives of families with children. 

But we must not forget about our hardworking neighbors. In many ways, the EITC expansion would simply fix a tax code that was broken for low to moderate-income workers without children in their homes.

Prior to the American Rescue Plan, the EITC excluded all workers under the age of 25 and over 64. For those who were eligible, the maximum credit, just $529, was so small that it did not fully offset income taxes, leaving millions of hardworking people taxed into poverty at the end of the year. 

This temporary expansion boosted the incomes of 17 million childless workers this tax filing season, 5 million of whom would be pushed into poverty after taxes if not for this temporary expansion.

Congress must permanently extend these changes to the EITC. Doing so would help younger and older working adults make ends meet and lift millions out of poverty as they enter the job market. It would also reward workforce participation for childless workers overall and keep hardworking folks from being taxed into poverty. 

This isn’t just good policy, it’s the right thing to do. No one in America should be forced into poverty because of the taxes they pay. 

For too long, our country has been one of haves and have nots. One of working-class people producing our nation’s abundance while having little to nothing to show for themselves, their families, and their communities. If we want a full and just economic recovery for the folks who need it most, providing much-needed relief to low-income childless working people is an essential priority — one for which we are all overdue.

If this isn’t the right moment to take a giant step toward lifting every person in America out of poverty, when is it?

Jessica Fulton is the vice president of policy at the Joint Center for Political and Economic Studies, and author of the newly released policy brief, “Improving the Earned Income Tax Credit for Black Workers Without Children.” 

Tags Biden Child tax credit earned income tax credit economy Income Inflation Joe Biden Tax

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