Tanvi Misra is a staff writer for CityLab covering immigrant communities, housing, economic inequality, and culture. She also authors Navigator, a weekly newsletter for urban explorers (subscribe here). Her work also appears in The Atlantic, NPR, and BBC.
Expanding the Earned Income Tax Credit would help low- and middle-income taxpayers, regardless of their geography or political beliefs.
Upon filing their 2016 taxes, families earning between $39,300 and $53,500 a year can catch a little break—a tax break, that is. Depending on their marital status and family size, those within this income bracket can cash in on the Earned Income Tax Credit (EITC) in a few weeks. And the extra thousands in refunds can help them settle past-due bills and debts, pay for things their kids need, and fund home and car repairs.
EITC was born in the 1970s, inspired by a poverty assistance plan put forth by—and this might come as a surprise—Richard Nixon. Over the next few decades, the program was expanded under both Democratic and Republican administrations. Ronald Reagan called it “the best anti-poverty, the best pro-family, the best job creation measure to come out of Congress.” And he wasn’t wrong: since its inception, EITC has helped pull people out of poverty, boosted employment, and improved the mental and physical health of participants and their kids. With a few exceptions, the program has enjoyed bipartisan support, and a new analysis by the Brookings Institution shows why.
Simply put, the program bridges the geographic and demographic divides that have come to the surface since the 2016 presidential elections. The much-talked-about white working class (those in the white population without a college degree) make up 40 percent of total EITC-eligible taxpayers. Black and Latino working class workers, together, also constitute 40 percent. In other words, the program benefits both the group that helped put Donald Trump in the White House and the ones that overwhelmingly voted for Hillary Clinton.
Here’s a chart showing the composition by race and educational attainment for 2015 EITC filers:
The benefits of EITC also transcend the rural-urban split. In fact, residents of economically lagging rural communities stand most to gain from this program, Brookings’ Elizabeth Kneebone and Cecile Murray explain in the analysis:
One in four white working-class taxpayers who are eligible for the EITC live in counties outside of the 100 largest metropolitan statistical areas, and one in six live in non-metropolitan counties (see Figure 2). In fact, in most states, the majority of EITC-eligible filers in rural areas are white working class residents. For example, in Vice President Mike Pence’s home state of Indiana, 55 percent of rural taxpayers eligible for the EITC in 2015 were white workers with a high school diploma or less.
Here’s a breakdown of 2015 EITC filers by where they live:
In other words, the program benefits the constituents of both political parties. As Neil Irwin puts it in The New York Times, it’s an example of a welfare program that, apart from having moral value, streamlines political ideologies toward a common goal:
Conservative supply-siders argued that cutting taxes would lead businesses to invest more, unleashing faster economic growth as the productive capacity of the nation increases. In the emerging liberal version, government programs enable more people to work, and to work in higher-productivity, higher-income jobs. The end result, if the research is correct, is the same: a nation that is capable of growing faster and producing more.
Of course, the EITC isn’t perfect. Working poor without children get significantly less in benefits from this program compared to their married counterparts. And if parents are divorced or separated, only the parent who has custody of the child—usually the mom—can claim EITC. And of course, the program doesn’t apply to folks who don’t have a job or can’t work. Including these groups, and retaining key 2009 expansions of the program due to expire this year will go a long way in strengthening an anti-poverty program everyone can get behind.
Former President Barack Obama and House Speaker Paul Ryan were at loggerheads about a lot of things, but EITC wasn’t one of them. They both proposed similar expansions to the program. And while differences on how to boost the American middle class exist between the current president and Ryan as well, improving the EITC remains a common goal—and could be the bipartisan victory the White House is looking for.