The Earned Income Tax Credit (EITC) is an earnings supplement available through the income tax system that offsets payroll taxes and supports low- and moderate-income workers raising children. It has grown to be called the nation’s largest federal anti-poverty program. The EITC has had significantly beneficial effects for its recipients and their communities. These include encouragement of work, reduction of poverty, and boosting of local economic activity.
The EITC has always had features that distinguish it from traditional family support and tax policies. It is predicated on work. It is claimed not through caseworkers and onerous application processes but by filing a tax return. And it is refundable, meaning that the amount of the credit is not tied to one’s federal income tax liability. Pioneered by the EITC, these are now features of several programs.
The new approach of the EITC created a new environment. The credit has spawned a remarkable array of social, business, and political activity. There is a national network devoted to promoting the existence of the credit, a large business sector (commercial tax preparers) and a burgeoning non-profit industry (community tax programs) each closely tied to it, financial services and products reliant on it, and significant political activity related to it.
This brief describes this activity, labeling it the “EITC Movement”. This is not a traditional social movement. In fact, it is the work of dispersed actors pursuing sometimes disparate goals. It has been about a decade since this EITC Movement began to emerge in earnest, and it has now reached a maturity characterized by greater stability and institutionalization.
This brief reflects on what the EITC Movement has achieved. Making this assessment is a challenge. As a collection of distinct (however interrelated) efforts, there is not a clear set of goals to use as the standard for measuring accomplishments. An added complication is the limited data available for empirical observations.
This brief also looks ahead at the future for the EITC Movement. Challenges to the relatively stable environment of the past decade are likely. All levels of government are experiencing budgetary pressure that could affect both policy and program, and the typical cycle of philanthropy points to a period of re-evaluation and change. It is time to examine fresh approaches.
After setting the historical context for the past decade, the paper describes how the EITC Movement coalesced and grew. It then evaluates the impact of these efforts from various perspectives before concluding with a look forward to potential developments.