President Obama sent his 2015 budget proposal, which totals $3.901 billion, to Congress on Tuesday. Among the measures that will alter federal tax policy is one proposal that could affect the lives of many people in low-income pockets of cities: The Earned Income Tax Credit (EITC).
Few policies are more effective at reducing inequality and helping families pull themselves up through hard work than the Earned Income Tax Credit (EITC). The EITC for families with children lifts millions out of poverty each year and helps about half of all parents at some point in their lives. But as a number of prominent policymakers, both progressive and conservative, have noted, the EITC does not do enough for single workers who do not have kids. The Budget doubles the value of the EITC for workers without children and non-custodial parents, and also makes it available to younger adult workers, so that it can encourage work in the crucial years at the beginning of a young person’s career.
“Childless workers are the lone group that the federal tax system taxes into, or deeper into, poverty,” reads one report from the Center on Budget and Policy Priorities. Researchers at the D.C.-based think tank ran the numbers after Obama’s announcement and, as the chart below shows, found that an overhauled EITC could drastically change the lives of childless low-income workers.
For childless adults working at the poverty level, estimated to stand at $12,566 by 2015, the EITC would skyrocket from $171 to $841. It cannot be stressed enough how big of a difference that $670 yearly increase could make for someone hovering at the poverty line. And full-time employees making the minimum wage ($14,500 annually) would see an increase in EITC from $22 to $542.
Upping the Earned Income Tax Credit will not make your city a more equal place instantaneously. But it could give the working poor a considerable amount of money each year that may, in some cases, help lift them out of poverty.
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Bill Bradley is a writer and reporter living in Brooklyn. His work has appeared in Deadspin, GQ, and Vanity Fair, among others.