Could an additional $2,000 in tax credits lift poor single men out of poverty? That’s what New York City’s Center for Economic Opportunity intends to find out. With the help of a national evaluation firm, the city began recruiting and enrolling 3,000 city residents this fall in a three-year pilot project called Paycheck Plus that adds to the annual amount that low-income workers without dependent children receive through the federal Earned Income Tax Credit (EITC).

The federal EITC is a particularly popular anti-poverty tool that has historically enjoyed bipartisan support because numerous economic studies have shown that it encourages and rewards work while providing incentives for people to leave welfare. The New York City initiative comes at a time when the official poverty rate for the United States remains stuck at 15 percent and poverty rates in dozens of large cities have climbed to 25 percent or higher. Based on estimates released by the U.S. Census Bureau earlier in November for its supplemental poverty measure, the national poverty rate would be three percentage points higher if the EITC and Child Tax Credit ended tomorrow....

....Funding for the credits come from city tax levy funds, with an estimated budget impact of $6 million, though that's only an educated guess from MDRC, the firm evaluating the pilot’s impacts. The actual cost would depend on whether eligible recipients sign up for the city credit. It’s unlikely that all of the 3,000 people selected for the city credit will sign up, said Cynthia Miller, an economist with MDRC.....

....The Brookings Institution held an event Nov. 14 to discuss the pilot project, in part because it’s unusual for a city to create its own tax credit, but also because the city has contracted with MRDC to implement a random-assignment study with treatment and control groups. In addition to the 3,000 city residents who would receive the supplemental credit, 3,000 “control” participants would not. MDRC will track outcomes such as quarterly earnings and child support payments for both groups using government records, but also a follow-up survey that will measure impacts on other aspects of people’s lives, such as food security, marriage and fertility....

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