Enhancing the EITC Would Encourage Work and Reduce Poverty

Moneybox
A blog about business and economics.
Jan. 28 2014 10:58 PM

Enhancing the EITC Would Encourage Work and Reduce Poverty

eitc

Most of the State of the Union policy proposals we heard tonight were either a little trivial-sounding or a little unrealistic-sounding in the face of congressional Republican opposition. But one idea Obama mentioned was to make the Earned Income Tax Credit more generous for nonparents and for noncustodial parents. The way EITC works now is that it offers a substantial economic boost to a population largely composed of working single moms and some married couples with kids, but very little for people who don't have kids at home.

As this report from the Center on Budget and Policy Priorities details, changing that to make EITC benefits more broadly available would do a lot to boost incomes in a way that encourages and rewards work and employment. They also think it might boost marriage rates, by boosting the incomes of male low-wage workers and making marriage and family formation more feasible:

Raising the rewards of work for childless workers also may increase their marriage rates, several analysts have noted. Marriage rates have fallen almost 30 percentage points for the lowest-income men since the 1970s. In 1987, William Julius Wilson noted the correlation between falling real wages and declining marriage rates in low-income communities, arguing that low employment rates and falling wages reduced the “marriageability” of these young men, resulting in an increase in the number of female-headed households. More recently, a 2009 study found that three-quarters of low-income, unwed survey respondents cited financial concerns as an obstacle to marriage.
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To the extent that interest in marriage can push social conservatives to support this kind of thing, so much the better. And, indeed, Marco Rubio recently called for a measure that would be very much along these lines. The difference is that as phrased Rubio's plan to boost EITC for the childless seemed to entail EITC cuts for parents. That's kind of perverse. But if Rubio is genuinely interested in the idea, maybe a more reasonable way can be found to pay for it.

Matthew Yglesias is the executive editor of Vox and author of The Rent Is Too Damn High.

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