The Earned Income Tax Credit (EITC): An Economic Analysis

Source: Margot L. Crandall-Hollick, Congressional Research Service, CRS Report for Congress, R44057, February 1, 2016

The Earned Income Tax Credit (EITC) is a refundable tax credit available to eligible workers earning relatively low wages. The EITC, enacted nearly 40 years ago, has evolved from a relatively modest tax benefit to a significant antipoverty program. In light of potential congressional interest in modifying the credit, this report reviews the economic research on the EITC. An understanding of the economic impact of the credit, as well as its limitations and potential drawbacks, may inform future legislative modifications of the credit….