Why Should America Support the Earned Income Tax Credit?

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Date
2013Author
Kleine, Katja E.
Subject
Earned income tax credit
Poverty
Tax Reduction Act of 1975 (United States)
Social justice
United States. Internal Revenue Service
Washington and Lee University -- Capstone in Shepherd Poverty Program
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Katja E. Kleine is a member of the Class of 2014 of Washington and Lee University. Capstone; [FULL-TEXT FREELY AVAILABLE ONLINE] The purpose of this paper is first and foremost to bring more attention to the Earned Income Tax Credit and to respond to growing arguments against it. First, I will explain the arguments and attacks. Then, I will explain why any tax expenditure (whether benefiting low-income or high-income families) should be seen as a form of social spending; I will also defend the refundable portion of the EITC. Finally, I will answer the broad question: “Is the EITC an effective program?” In the end, I will show that the EITC is successful at lowering marginal tax rates and increasing labor supply. Just as importantly, I will also show that the Earned Income Tax Credit is one of the most effective anti-poverty programs in the United States today; as a result, it should be both supported and expanded. [From Introduction] Katja Kleine