Getting Back to the Earned Income Tax Credit: The Next EITC Reform

In this article, the authors argue that instead of focusing on the child tax credit that has received so much attention recently, reformers should shift their attention back to the earned income tax credit (EITC) and press for three simple changes that would support work and marriage: Reduce the maximum EITC phaseout rate (the implicit marginal tax rate); further increase EITC benefits for married couples relative to single individuals; and provide an additional EITC benefit for a third child. They contend that the EITC, which was originally conceived as a work bonus, should continue to be the key policy vehicle for assisting workers in low-income households, rather than the child tax credit, the minimum wage, or welfare.