Earned Income Tax Credit Looks Like It Needs Work
New research suggests the EITC isn’t very effective at encouraging the poor to enter the labor force.
Maybe we got fooled.
Photographer: Paul J. Richards/AFP/Getty ImagesThe earned income tax credit is the leading example of smart centrist policy. In the 1980s and early 1990s, the U.S. saw bruising political battles over antipoverty policy, with conservatives charging that welfare discouraged work. In response, centrists cooked up the EITC as a compromise. Because the credit doesn’t give any money to people who don’t work, it is immune -- at least in theory -- to conservative criticism that it encourages laziness. In fact, because the EITC payment increases the more you earn, up to a certain threshold, it tends to encourages people to go to work:
For parents with more children, the maximum payments are higher.