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Expanding EITC Efficacy

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Federal legislators took unprecedented actions to combat the COVID-19 pandemic. Through powerhouse legislation like the American Rescue Plan (ARPA), the federal government provided eviction protections, stimulus checks, and emergency funds to communities across the country. APRA was historic legislation that expanded many essential programs including the Earned Income Tax Credit (EITC).

The EITC is one of the country’s primary anti-poverty tools. Introduced in the 1970s, the early version of this program was praised across the aisle, including from fiscal conservatives like former President Ronald Reagan. Since its creation, the program has existed to help alleviate the tax liability on low and working-class families. However, in many cases, it provides a credit above and beyond such liability. The EITC program has always relied on means-testing or requiring some income to benefit. Its work requirement could explain how it garnered bipartisan support in its passage.

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Bipartisan support for the program has not led to necessary expansions. The expansion in the 1990s under former President Bill Clinton was when the program took shape as a significant vehicle for reducing poverty among low-income families. These changes almost doubled the maximum credit amount for families with at least one qualifying child.  

Limiting economic support through the EITC to families with qualifying children excludes a significant population of low-income workers who need support. Of course families and children need assistance, but they are far from the only working Americans who require it. The COVID-19 pandemic was the first time legislators acknowledged this deficiency and responded by increasing the childless worker credit age range and maximum through ARPA.

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