Trump Reverses Course on EITC in Budget Proposal

By Lauren Pescatore

In recent months, President Trump has vowed to help more working families afford child care by bolstering the Earned Income Tax Credit (EITC). Now, he’s proposing to cut spending for the EITC and Child Tax Credit (CTC) by $40 billion, effectively raising taxes on the low-wage working families who may no longer be eligible for these credits.

The President’s budget, released today, includes $274 billion in cuts over 10 years to many anti-poverty programs and would considerably weaken the federal safety net, a lifeline for many struggling, low-income Americans.

If enacted, the budget would reform eligibility requirements for the EITC and CTC, exacerbating the racial wealth gap by preventing many immigrant taxpayers and their children from benefiting from the credits. Disqualifying taxpayers filing with an Individual Taxpayer Identification Number (ITIN) from receiving the CTC would put more than four million Latino children and their families at greater risk of poverty and hunger, according to the National Council of La Raza.

Scaling back the EITC at the federal level is in stark contrast to the monumental progress the credit has made at the state level. This past legislative session, South Carolina and Montana both enacted state-level EITCs with bipartisan support, and Hawaii is expected to follow suit in the next several months.

For updates on how tax credits for workers and their families will fare under the new budget, follow TCWF on Twitter @TaxCreditsWF.