New Research Bolsters Growing Momentum to Expand EITC for “Childless Workers”

By Lauren Pescatore

Promising new findings from an Earned Income Tax Credit (EITC) pilot program and a Tax Credits for Working Families (TCWF) focus group reinforce growing bipartisan support for expanding the EITC for “childless workers,” meaning those without dependent children.

Currently, a family of three can receive a maximum EITC of more than $6,000, while workers without dependent children can receive at most a $510 credit. Led by MDRC, the Paycheck Plus Demonstration pilot program simulates expanding the maximum EITC for childless workers to $2,000 in New York City and Atlanta. Released today, interim findings from the program show a meaningful impact.

Not only has Paycheck Plus increased income and employment among participants, the program also increased child support payments and the rate of tax filing. In a video produced by MDRC, participants shared stories of how the expanded credit has helped them with everything from purchasing a bed to sleep on to paying off housing debt to covering expenses for their children.

In a July focus group conducted by TCWF, low-wage workers without dependent children expressed similar spending needs. Despite not claiming children as dependents on their tax forms, many participants were noncustodial parents who spent a large portion of their income providing for their children. When asked how they could use an additional $500 at tax time, two out of seven respondents answered that they would pay off outstanding bills. Three responded that they would cover expenses for their children – school supplies, clothes and Christmas presents. The remaining two participants responded that they would make necessary car payments in order to get to and from work.

When asked how they could use an additional $1,000 at tax time, participants’ answers shifted slightly to focus more on saving. While none of the respondents noted that they would try to save any of the additional $500 at tax time, two out of seven respondents indicated that the larger sum of money would allow them to pay off bills and save some for the future.

When asked about other goals they could achieve with additional income (without noting a specific amount), the participants began to think longer-term. Four out of seven participants answered that they would go back to school to pursue higher education to get a better-paying job. One participant wanted to buy a car, and another noted that he would buy a house.

These findings come at a time when lawmakers on both sides of the aisle are acknowledging the need for an expanded EITC. Yesterday, Senator Sherrod Brown (D-OH) and Representative Ro Khanna (D-CA) introduced joint legislation in the House and Senate to expand the credit nearly six fold for childless workers. House Speaker Paul Ryan and former President Obama both proposed similar legislation, and thought leaders on both the left and right have touted the idea as smart policy.