Research report Boosting Wages or Helping Children? Understanding How New Earnings and Child Tax Credit Proposals Impact Income Inequality and Vulnerable Children
Elaine Maag, Robert McClelland, C. Eugene Steuerle
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The earned income tax credit (EITC) and child tax credit (CTC) provide substantial benefits to working families with children. The EITC also provides modest benefits to workers without custodial children, often called “childless workers” for tax purposes. Together, the credits lift almost 9 million people out of poverty each year. We analyze the Working Families Tax Relief Act (WFTRA), the LIFT (Livable Income for Families Today) the Middle Class Act (LIFT Act), the American Family Act (AFA), and the Cost-of-Living Refund (CLR), all recent proposals to extend the EITC and CTC. For each proposal, we focus on fiscal cost and the distribution of benefits and analyze multiple alternatives to these proposals to better understand the inherent trade-offs between how expansive a proposal is, its cost, and how targeted the benefits will be.

Research Area Current legislative proposals Child tax credit (CTC)/Child and dependent care tax credit (CDCTC) Earned income tax credit (EITC) Low-income households Tax credits (individual)