Brief Expanding the Earned Income Tax Credit: The Economic Security Project’s Cost-of-Living Refund
Elaine Maag, Donald Marron, Erin Huffer
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The cost-of-living refund (CLR), a proposal from the Economic Security Project, would revise the current earned income tax credit (EITC) by increasing benefits for many people, expanding eligibility for the credit, and paying the credit in advance via monthly payments. The proposal would provide up to $4,000 annually to single workers and $8,000 for married couples. Benefits would phase in more rapidly than under the current EITC and would begin to phase out at higher income levels. Some caregivers and low-income students would be eligible, even with little or no earnings. All workers ages 18 and up would be eligible. On average, the 68 million recipients of the CLR who receive higher CLR benefits than EITC benefits would receive an additional benefit of about $3,430. For the 4 million people would receive a CLR, but their CLR benefits would be less than their current EITC benefits, we describe a way to augment or “patch” the CLR to avoid benefit reductions. The CLR proposal would cost about $2.5 trillion over a 10-year budget window. Patching the CLR with a separate credit for single parents with at least two children would cost an additional $131 billion and represents one way to keep total benefits for families at least as high under the CLR as under the current EITC.

Primary topic Individual Taxes
Research Area Campaigns, Proposals, and Reforms Earned income tax credit (EITC) Income tax (individual) Low-income households Tax credits (individual)