EITC

Max Sawicky sawicky at epinet.org
Sat Oct 9 22:24:30 PDT 1999



> . . .
> Rumors are that Bush may extend the EITC to much higher incomes, thereby
slowing the phaseout (and the supply-side burden) while selling the program as a broadbased tax cut for the middle class. Good politics and good policy. >

On the merits, the effects of the phase-out are not necessarily worth worrying about. What we're talking about, after all, is the premise that someone making between $12,300 and, say $29,000 (w/two children) is going hesitate about adjusting his/her hours of work because of the loss of 21 cents on the dollar of EITC benefits.

For single earners, I would suggest that the phase-out is irrelevant. If you're working enough to be in the phase-out range, your object is to make as much income as you can. You're looking beyond the top of the range to "middle-class" status. If you're a "secondary earner" in a two-earner family, arguably not working and having more time w/kids is not necessarily a bad social outcome (in this sense the EITC subsidizes child care for the stay-at-home earner, usually the woman).

The chief benefit of the phase-out's status as marginal tax rate villain is it affords an extra reason to stretch out the phase-out range and pay out more benefits to more people.

mbs



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