Tax Policy Center Co-Founder Proposes Universal EITC

By Devin Simpson

To eliminate poverty among working Americans, Tax Policy Center co-founder Leonard Burman proposes the creation of a new federal Earned Income Tax Credit (EITC) to provide additional income to all working Americans.

In his new policy paper, “A Universal EITC (UEITC): Sharing the Gains from Economic Growth, Encouraging Work, and Supporting Families,” Burman outlines a plan to provide a refundable credit worth 100 percent of earnings up to a maximum of $10,000. The proposal would eliminate the phase-out rates of the EITC, making the credit available to all working Americans at all income levels. The UEITC could be claimed at tax time or added to a worker’s paycheck. In addition, the proposal would expand the Child Tax Credit from $2,000 to $2,500 and make the credit fully refundable.

The policy could eliminate poverty among the working poor, according to Burman. For example, the income of a single worker making the current federal minimum wage would increase from about $14,000 to $24,000 per year. However, to fund the proposal, which would cost $1.3 trillion per year by 2023, Burman recommends enacting an 11 percent value-added tax (VAT). Burman argues that though a VAT is a regressive tax, the UEITC would offset the additional tax burden on low-income families and still increase their after-tax income significantly.

To learn more about Burman’s proposal, click here.