Study Supports Bills to Give the Poor and Childless Bigger Tax Breaks

Governing

Four years ago, New York City officials and a group of social scientists launched an experiment based on a simple question: Would a couple thousand dollars a year in extra tax breaks help low-income, childless adults find work and increase their earnings?

Early results suggest the answer is yes, which could boost proposals in Congress and states to expand the tax credit for low-income workers.

A three-year pilot project in New York City offered up to $2,000 in annual tax credits to adults who either have no children or aren't the primary caretaker of their children and make no more than $30,000 a year. Data from 2017 won’t be available until next year, but an interim report from 2016, the second year of the project, found that participants saw their earnings increase by 6 percent and employment by 2.5 percent. Among the participants who were parents, the likelihood of making a child support payment went up 9 percentage points and the average amount they paid each month increased by $54.

Last week, U.S. Sen. Sherrod Brown of Ohio and U.S. Rep. Ro Khanna of California, both Democrats, introduced legislation in Congress that would amend the federal Earned Income Tax Credit (EITC) to give nearly six times bigger refunds to low-income adults in this category. The bills would also raise the income eligibility limit, making the credit available to more people. Brown and Khanna would provide more generous benefits for primary caretakers as well, but those provisions are less of a departure from historical federal tax policy than what they propose for childless adults....

.....However, change is more likely to happen at the state level.

Since the recession, a handful of states -- both Democratic and Republican -- have enacted and expanded programs that match a percentage of the federal tax credit, bringing the total number of states with matching programs to 29. Now, states are increasingly paying attention to adults who have no children or aren't their primary caretaker.....

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