Families with children do not start to owe income tax until their earnings are above the poverty line. And, working poor families with children can qualify for an EITC and Child Tax Credit (CTC) that together offset their substantial payroll tax liability and help supplement their earnings.
The situation for low-wage earning childless adults is very different. Single childless adults begin to owe income taxes when their earnings reach just $10,000, some $2,000 below the poverty line for a single adult. A childless worker with earnings equal to the poverty line — $12,119 in 2013 — has an income tax liability of $212 (before the EITC) and owes $927 in the employee share of payroll taxes. (The employer owes another $927 in payroll taxes, the burden of which, most economists agree, falls on workers in the form of lower wages.) While the worker thus has a combined income tax and payroll tax liability of $1,139 (counting only the employee share of the payroll tax), she receives an EITC of just $169. This tiny EITC is less than her income tax bill alone. The combined effect of the income tax, including the EITC, and just the employee share of payroll taxes pushes this worker $970 below the poverty line.
Lone Group Taxed Into Poverty Should Receive a Larger EITC
All childless workers under age 25 are ineligible for the EITC, so low-income young people just starting out — who have disturbingly low labor-force participation rates — receive none of the EITC’s proven benefits, such as promoting work, alleviating poverty, and supplementing low wages.
CBPP – Strengthening the EITC for Childless Workers Would Promote Work and Reduce Poverty
- Under the 2015 federal laws the maximum income for the EITC for single, childless workers is at $14,820 annually.
- Under the 2015 federal laws the maximum income for the EITC for married, childless workers is $20,330 annually.
Create a state EITC with the following items to help childless workers:
- Lower state EITC age to 18
- Double the amount received for childless workers
- Raise the state EITC age limit from 65 to 67
Brookings – Interactive Earned Income Tax Credit
Brookings – EITC Expansion Would Strengthen Credit for Childless Workers
CBPP – Lone Group Taxed Into Poverty Should Receive a Larger EITC
CBPP – What Difference Would Ryan’s EITC Expansion Make for Childless Workers?
CBPP – Ryan Adds Momentum to Expanding EITC for Childless Workers
Center for American Progress – Improving the Earned Income Tax Credit to Better Serve Childless Adults
AEI – Balancing the trade offs: Options for expanding the childless worker earned income tax credit
AEI – Are the costs of the EITC worth it?
AEI – Balancing the Tradeoffs – Options for Expanding the Childless Worker Earned Income Tax Credit
National Journal – It’s Time to Strengthen the EITC to Give Childless Workers a Much-Needed Boost
New Republic – This Is Paul Ryan’s Best Idea Yet
Vox – What is Paul Ryan’s plan to expand the EITC?
The Atlantic – Republicans ‘Support’ Expanding the EITC—Just Not If It Costs Money
NY Magazine – Obama to Republicans: You’re Right, Let’s Expand the Earned Income Tax Credit
National Review – A Jeb Idea Other GOP Candidates Should Steal
Forbes – What Ronald Reagan Didn’t Say About the EITC
Where Not to Be Old and Jobless
A Ladder Up: Why Young And Childless Americans Are Excluded From The Earned Income Tax Credit And How We Can Expand It
Minnesota Budget Project – Let’s make sure successful tax credits reach all struggling workers
PBS – The bipartisan idea that gives a tax boost to childless workers
MDRC – Paycheck Plus: Expanded Earned Income Tax Credit for Single Adults
C Span – Analysis Obama’s EITC Extension for Childless Workers
Center for American Progress – EITC Expansion for Childless Workers Would Save Billions—and Take a Bite Out of Crime
The American Prospect – Papa’s Not a Rolling Stone: Low-Income Men and Their Children