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Earned income credit backers aim to keep expansion on the radar

Tax benefit for childless workers in the mix as lawmakers weigh year-end tax deal

Sen. Sherrod Brown, D-Ohio, is seen after the Senate luncheons in the U.S. Capitol on Tuesday, Nov. 29, 2022.
Sen. Sherrod Brown, D-Ohio, is seen after the Senate luncheons in the U.S. Capitol on Tuesday, Nov. 29, 2022. (Tom Williams/CQ Roll Call)

Outside groups are urging Congress to bolster a key tax benefit for low-income workers in a year-end legislative package after a previous expansion lapsed.

Organizations including anti-poverty advocates, civil rights groups, seniors group AARP and business representatives are calling on lawmakers to boost earned income tax credits for workers without children at home, arguing it’s a critical program for low-wage workers and would boost the economy amid lagging workforce participation.

Under Democrats’ pandemic relief law, the maximum dollar value increased for the earned income tax credit for workers without dependent children who live with them a majority of the year, the benefit phased in faster, and the benefit became available at higher income thresholds. Democrats also made the benefit available to most qualifying workers age 19 or older, scrapping age limits.

The roughly $12 billion, one-year expansion lapsed after 2021, reverting to a smaller credit and shrinking the pool of those who qualify to workers age 25 to 65.

The Center on Budget and Policy Priorities, a think tank that has lobbied in favor of the expanded credit, estimated that with the expansion’s end, almost 6 million working adults without children would be taxed into, or deeper into, poverty.

Kris Cox, deputy director of federal tax policy at the CBPP, said the 2021 expansion was “long overdue” after workers without qualifying children hadn’t seen a meaningful increase in benefits since they became eligible for the credit in 1993.

She added it has a significant impact on income inequality, citing benefits flowing to a significant portion of young Black adults under the 2021 expansion.

“This group is a group of people who are working important jobs for very low pay and not raising children at home, and this has been a topic of discussion among policymakers for many years,” Cox said.

‘Hugely powerful tool’

AARP, which advocates for individuals over age 50, is pressing Congress to scrap the upper age cap in a lame-duck tax package. That’s among a handful of year-end priorities that AARP highlighted in a letter this month to party leaders.

“Here’s a group of workers who are not being treated the same as their younger counterparts and who could very well find it affordable to have a job, and that’s really the way to think about it,” Cristina Martin Firvida, AARP vice president of financial security, said in an interview. “The EITC maybe makes that difference.”

Firvida said removing the age cap would aid both individuals and businesses by making it more cost-effective for people over 65 to participate in the labor market during a time when high inflation can raise costs associated with having a job — like paying for gas to commute.

She added that while the benefit hasn’t gotten as much attention as some others in the mix, AARP believes the age cap cuts off 2 million older workers from the benefit and is working to remind lawmakers of its importance.

AARP has worked on the issue with the Critical Labor Coalition, which includes trade groups like the National Restaurant Association, American Hotel and Lodging Association and Coalition of Franchisee Associations, and has reported lobbying to permanently open the tax credit to everyone 18 and older.

Misty Chally, who is lobbying on behalf of the coalition, said in an interview that supporting a broader earned income credit for workers without dependent children is among the ways the group is hoping to address labor shortages. Chally described the benefit as a “hugely powerful tool” for incentivizing people to participate in the workforce.

Several groups that are asking Congress to revive Democrats’ 2021 child tax credit expansion — another feature of their pandemic aid law that lapsed at the start of this year — are also urging them to take up the earned income tax credit boost, though the child tax credit has won a larger spotlight.

While separate programs, the expansions are often linked because the child credit covered families with dependent kids while the “childless” earned income tax credit aided other workers.

Community Change Action, an advocate for low-income individuals focused on aiding people of color, took part in a news conference in front of the Capitol last week with Democratic lawmakers who’ve championed the child credit expansion. The group led a letter to party leaders with lame-duck priorities including making the 2021 earned income tax credit expansion permanent.

Veterans groups including the National Military Family Association sent their own letter backing a revival of both credit expansions. They wrote that the expanded earned income credit helped veterans, who often have problems paying their bills particularly in the years just after leaving the military.

Some lawmakers, including a group of newly elected House members, have called for the earned income tax credit and child tax credit to make it into a year-end tax package, which would almost certainly need to be tucked into a fiscal 2023 funding package.

Broader deal prospects

With time short, Republicans resisting Democrats’ bid to revive the larger child credit and cost a major factor, lawmakers could turn to tax provisions beyond the child credit that aid lower-income families in exchange for extending business tax breaks the GOP is advocating.

The earned income tax credit on its own could come into the mix, though lawmakers have been more actively pressing for other bipartisan options like the low-income housing tax credit, which incentivizes affordable housing.

During a news conference last week with Democrats and advocates, Sen. Sherrod Brown, D-Ohio, said the deal they would offer Republicans would be no business tax breaks in a year-end package without the child credit and earned income credit. But other advocates focused solely on the child tax credit.

Connecticut Rep. Rosa DeLauro said the group of six Democrats at the event have focused on the child benefit because of its impact and transformative nature.

“It’s true on the earned income tax credit. I’m sure that that will be part of the discussion,” DeLauro said. “But our focus has been singularly on the child tax credit and making sure that it doesn’t go by the boards here.”

Lawmakers are likely to keep hearing calls for the earned income tax credit if tax legislation comes together in the next couple of weeks.

Other groups that reported lobbying on the benefit for the third quarter of 2022 included the National Association for the Advancement of Colored People, women’s organization YWCA USA, The Leadership Conference on Civil and Human Rights, Economic Security Project Action, Bipartisan Policy Center Action, anti-hunger advocate Feeding America, the Jewish Federations of North America, and companies Equifax Inc. and Etsy Inc.

Golden State Opportunity Foundation reported spending $19,500 on lobbying in the third quarter, and the only issue the California anti-poverty group listed addressing in its disclosure was an earned income tax credit expansion.

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