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New York Provides EITC Test Case

Obama administration staffers working on the president’s proposal to double the earned income tax credit availability to single childless workers could take a lesson from New York City, which last year launched a pilot program to do just that.

In his budget message, the president said his proposal was intended to “encourage work in the crucial years at the beginning of a young person’s career.” Many of those who would benefit are likely to be single men, who have found themselves excluded from federal EITC benefits that are aimed at working parents.

Under the federal program, tax credits for single childless workers are capped at $487 a year, while people with children can get as much as $6,000 a year in refundable tax credits.

The New York program would boost the maximum value of refundable tax credits for single childless workers to $2,000 a year for three years for those earning less than $26,800 a year. Most of the benefits would go to those earning between $6,667 and $14,300.

“The goal is to really try to learn from experience how does this program operate and to see what the effects are on income and well-being and hardship as well as employment and earnings,” Gordon Berlin, the president of the research firm hired by New York to run the pilot, said during a recent panel discussion at the American Enterprise Institute.

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