New Report Highlights Need for Periodic EITC, CTC Payments
December 2, 2020Print
By Devin Simpson
A recent report outlines a framework for creating periodic payments for the Earned Income Tax Credit (EITC) and Child Tax Credit (CTC) to help families maintain economic security throughout the year.
The Georgetown Center on Poverty and Inequality’s Economic Security and Opportunity Initiative’s new report, Matching Timing to Need: Refundable Tax Credit Disbursement Options, examines the disconnect between the financial needs of American families and the credits’ one-time payment during tax season. The authors highlight how financial instability has only increased due to COVID-19, as families contend with job instability and low wages. And while the EITC and CTC are among the tax code’s most effective anti-poverty tools, their current payment schedules do not sufficiently help families address immediate expenses like a missed rent payment. By transitioning to periodic payments, the authors argue, the credit would be better aligned with low-income families’ immediate needs. They also emphasize that this change would help advance economic mobility for women and people of color.
Additionally, the report examines periodic payment pilot programs across the country, proposed federal and state legislation to restructure the EITC’s payment schedule, and periodic payment mechanisms in other countries. With these examples in mind, the authors provide an overview of periodic payment design considerations and guiding principles policymakers should consider as they craft legislation. The report provides applied recommendations for how these design elements could be used in practice to reform the EITC and CTC’s payment schedule and overcome existing challenges in the current tax system.
Read the full report here.