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Expanding the EITC: The President's Proposal

On March 5, 2014, experts discussed the President's proposal to expand the Earned Income Tax Credit (EITC) at a special event. This initiative aims to provide significant tax relief for working families, enhancing their economic stability and lifting many out of poverty. Speakers included Aviva Aron-Dine, Associate Director for Economic Policy at the Office of Management and Budget, and Elaine Maag, Senior Research Associate at the Tax Policy Center, who provided insights into the proposal's implications and benefits for American households.

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Expanding the EITC: The President's Proposal

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  1. Expanding the EITC: The President's Proposal

    Wednesday, March 5, 2014 Tax Credits for Working Families
  2. Our Speakers Aviva Aron-Dine, Associate Director for Economic Policy, Office of Management and Budget Elaine Maag, Senior Research Associate,Tax Policy Center Robert Doar, Morgridge Fellow in Poverty Studies, American Enterprise Institute Sharon Parrott, Vice President for Budget Policy and Economic Opportunity, Center on Budget and Policy Priorities Moderator:Deborah Stein, Tax Credits for Working Families

  3. The President’s Proposal to Expand the Earned Income Tax Credit

    Aviva Aron-Dine Associate Director for Economic Policy Office of Management and Budget March 5, 2014
  4. Contextfor the Proposal: Success of EITC for Families with Children Together with the refundable Child Tax Credit, it lifts 10.1 million people (5.3 million children) out of poverty Increases labor force participation Recent study found EITC leads 1/10 parents who would otherwise not be working to enter the labor force Studies found 1980s and 1990s EITC expansions pulled more than half a million people into the workforce Positive impacts on children’s outcomes: infant health, educational achievement, college going
  5. Context for the Proposal: Federal Taxes and Poverty
  6. Contextforthe Proposal: Labor Market Trends
  7. ThePresident’s Proposal to Expand the Earned Income Tax Credit Current “Childless Worker” EITC Too small Phases out at too-low incomes (more than halfway phased out at the poverty line) Younger workers (less than 25) aren’t eligible Proposal Double maximum credit Raise income level at which credit is phased out to ~$18,000 Lower age limit to 21 Also raises upper age limit to harmonize with Social Security full retirement age
  8. Impact of the Proposal: Examples Examples Single worker at the poverty line. An individual who works 35 hours per week at the minimum wage earns $12,688, close to the poverty line for a single adult in 2015. Under current law, this individual would receive an EITC of only $161 ($503 less 7.65% x earnings over $8,220). Under the proposal, the worker would receive an EITC of $823. A 23-year old earning just above the minimum wage, with an income of $15,000. Under current law, this worker is doubly ineligible for the EITC, by virtue of her age and the fact that her earnings are above $14,790. Under the proposal, she would be eligible for an EITC of $470.
  9. Impact of the Proposal on Poverty
  10. Impact of the Proposal: Who Benefits? Data on current EITC suggest 1.5 million or more of those benefiting would be non-custodial parents
  11. Payingfor the Proposed EITC Expansion For additional information about the proposal and estimates of its impact: http://www.whitehouse.gov/sites/default/files/docs/eitc_report_0.pdf
  12. Moderated Discussion Who will benefit?
  13. Real Federal Spending on the EITC, CTC, SNAP, and Welfare
  14. Tax Entry Threshold – Before and After Tax Credits, 2014
  15. Moderated Discussion How will this work in practice?
  16. Moderated Discussion What comes next?
  17. States with EITCs
  18. Questions? Please type your questions in the Q and A box
  19. Developments http://bit.ly/expandingEITC http://www.taxcreditsforworkingfamilies.org/blog

  20. Tax Credits for Working FamiliesManaged by The Hatcher Group

    Debbie Stein and Lauren PescatoreDebbie@thehatchergroup.comwww.taxcreditsforworkingfamilies.org(301) 656-0348 Follow us on Twitter @TaxCreditsWF
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