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Bipartisan Agreement: The EITC Works

As Chuck Marr, an economist with the Center on Budget and Policy Priorities, recently wrote there is one anti-poverty initiative that both sides of the aisle agree on: the Earned Income Tax Credit.

In one sense, conservative support for strengthening the EITC isn’t surprising.  This tax credit has enjoyed broad bipartisan support over the years — President Ford signed it into law, and President Reagan lauded the credit and proposed, and signed, a major expansion of it — because the EITC helps low-income people struggling to make ends meet while encouraging work and personal responsibility.

As Richard Burkhauser of Cornell University and AEI said recently, “I’m not exaggerating when I say, look, I’ve been doing public policy since the 1970s, and this program worked.” [8]  Leading conservative economist and Nobel laureate Gary Becker of the University of Chicago has made similar, highly laudatory comments about the EITC, noting that it “increases the labor force participation and employment of people with low wages.”[9]

The evidence is very clear that the EITC has powerful impacts on workers and their children.  In 2012 the combined impact of the EITC and Child Tax Credit lifted 10.1 million people out of poverty in the country.  Children benefit from the additional income and have been shown to do better in school and earn more as adults.

It is therefore disturbing as we reflect on the evidence supporting the power of the EITC to achieve better economic outcomes that policymakers in North Carolina took the unprecedented step of eliminating the state tax credit for 900,000 families in our state.  A move that will make the path to the middle class that much steeper, a move that should be undone this session.

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