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The Earned Income Tax Credit

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  • Hilary Hoynes

Abstract

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.

Suggested Citation

  • Hilary Hoynes, 2019. "The Earned Income Tax Credit," The ANNALS of the American Academy of Political and Social Science, , vol. 686(1), pages 180-203, November.
    • Handle: RePEc:sae:anname:v:686:y:2019:i:1:p:180-203
    DOI: 10.1177/0002716219881621
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