President Obama’s budget to be released on Tuesday will propose expanding the earned-income-tax-credit and the child-tax-credit, a pair of tax policies targeting low-income and middle-income Americans that the White House hopes could appeal to Republicans who also support the policies.
Obama will propose expanding the EITC to benefit the roughly 13.5 million workers who don’t have children. While low-income workers without children are eligible for the tax credit – a kind of cash bonus – it is far more generous for workers with children. According to the Center on Budget Policy and Priorities, childless workers receive an average credit of $270, compared to $2,790 for workers with children. In addition, childless workers under 25 are ineligible.
Under the current EITC, workers get 7.65 cents back on every dollar they earn up to $6,570, for a maximum of $503. Then the amount of the tax credit is frozen until the worker earns $8,220. At that point, the EITC starts phasing out until the worker’s income is $14,790, at which point the credit is worth zero.