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Essay Subject: Advantages & disadvantages of EITC as way to reduce income inequality, impact on beneficiaries & incentive to work.... More...

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Paper Abstract: Advantages & disadvantages of EITC as way to reduce income inequality, impact on beneficiaries & incentive to work. Paper Introduction: THE EARNED INCOME TAX CREDIT: AN ANALYSIS Introduction This research examines the Earned Income Tax Credit (EITC). The overall objective of this examination is to assess the advantages and disadvantages of the EITC as a way of reducing income inequality within the United States. In this research, this overall objective is addressed through focusing on the effects of the EITC on (1) the levels of disposable money income of beneficiary families and (2) the incentives of beneficiary families to work. EITC: Description and Objectives The EITC was enacted in 1975 to “offset the impact of Social Security and Medicare taxes on low-income individuals and to encourage them to work instead of relying on welfare benefits” Text of the Paper: The entire text of the paper is shown below. However, the text is somewhat scrambled. 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From this text you will be able to get a solid sense of the writing style, the concepts addressed, and the sources used in the research paper. advantages anddisadvantages of the EITC as a way income of beneficiary families and relying on welfare benefits Helping p more than Helping p The mid s the total budgetary cost of the is primarily a consequence of direct publicassistance as a means of helping the p The principal reason for earned up to a specified amount The EITC is credit reaches the maximum when the family's income is percent for those families with annual earnings below and then a marginaltax rate of percent a week at the minimum wage annualincomes above and percent to changes to the EITC program poor Dickert Houser Scholz p With respect to the EITC For families with incomes close to the two children for example the credit is more precisely the percentage change reduction in the net wage rate and that is the aredifferent from those in the phase-out range Browning p effort Although the net effect can intheory go either way EITC producing a reduction inmoney income Browning p disposable income willincrease Browning p The EITC however can credit but togetherthey could claim just Work With respect to the effect range For those in the phase-in range the EITC supply Browning p For low-income families dollar of earnings As a consequence the EITC is tangential ties to the workforce those who do low-incomes the changes to the EITCprogram work But the expansionof the food stamps or Aid toFamilies with Dependent out the marginal tax rates for families of modest meansincrease the findings of this examination one may conclude those families with the lowestannual incomes While some critics of opposed to the latter stages With families however the EITC has littleeffect on income inequality References July Economist Browning E K March Effects of the earned B August Use tax credit as Tax Journal Scholz J K March The earned income Tax Credit EITC Theoverall objective of is addressedthrough focusing on the effects of impact of Social Securityand Medicare taxes on and the General Accounting Office from the concept of a negative income about billion by the late s-a fold increase over Administration Browning p The EITCrepresents a childrenin the United States increased A slap p The EITCis designed to help such up-slope a plateau and adown-slope For a family with A slap p The EITC functions as an earnings subsidy Between and the EITC operates like anegative income tax NIT poverty To a limited degree this wasaccomplished equal to the poverty line Browning p In percent of with incomes above their poverty lines payments will be made to taxpayers with incomes up to money income to bereduced the closer a to the family's total income increase disposable income becomes smaller the closer the family'sincome to smaller as income iscloser to the breakeven level At for Browning p The effects of the EITC produces a substitution effect favorable to work both imply increases in disposable income sothere as a lump sum transfer Thus labor supply a low-wage man with two children the marriage with two children can claim an earned-income credit of up family's incomeand earnings place it in the phase-out range it acts like EITCrequires recipients to work Moreover the additional dollar ofearnings The EITC significantly increases full-time at minimum-wage jobsthroughout the eligible for the EITC program the changes billion in credits a year or severalbillion dollars these resourcesto the lowest-income families has is lower as a consequence of the families and creating an incentive for such families to work preferable that thegreatest benefits be provided inequality With respect to low income families generallyand Tax Journal A slap in September Taxes andthe poor A microsimulation study poor January State Legislatures Holtzblatt J McCubbin J Gillette THE EARNED INCOME TAX CREDIT AN ANALYSIS Introduction This of reducing income inequality within the incentives of beneficiaryfamilies to work EITC Description and Objectives Originally a family could receive EITC is anearnings subsidy rather than a guaranteed minimum EITC was billion with million families expansionsof the EITC enacted in during the working poor A slap p Effects on Disposable Money Income this occurrence has been thesteady erosion a refundable taxcredit applied to the federal individual income tax It then remainsconstant until the family's earnings hit from is analogous to a lump sum transfer Browning p A principal objective of the expansion of the andsupports a family of four families with incomes above One estimate is that approximately half increased payments to low-incomeworkers by disposable money income static theory may be appliedto predict breakeven income the size of thecredit or lessthan one percent of gross in the net wage rate that same percentagereduction as for all Inthe phase-in range the EITC acts to elasticities imply that labor supply willincrease Furthermore the income and In the plateau range there result in so-called marriage penalties Forman p As an example one much smaller credit Both a married couplewith two of the EITC on the incentive to work thecharacter of acts like awage rate increase and the EITC makes work pay in two ways Unlikeany other an alternative to other transfer programs that arecharacterized by not work at all as increased the marginal return to work EITC has been expensive By the end of the Children Of this amount billion isattributable to For workers with incomes slightly above the that theEITC is successful in both the EITC fault this latter outcome for the respect to families below theofficial poverty line and Alstott A L September The earned income tax income tax crediton income and welfare National an incentive formarriage Insight on the tax credit Participation compliance and antipoverty this examination is to assess the the EITC on the levels of disposablemoney low-income individuals and to encourage them to workinstead of predicts an average creditof slightly tax Alstott p In the approximately years with million familiesreceiving benefits This growth move away from the minimum wage and from from percent to percent A slap families by providing a refundable tax credit forevery dollar two or more children the with a negative marginal taxrate of with a breakeven income of and A worker who works hours EITC refunds went to families with when the reform is fully effective Scholz p The Thus the EITC is not tightly targeted on the family's income is to the breakeven level of At for a family with the breakeven income In contrast the substitution effect or example there is a percent in the phase-in and plateau ranges effort and anincome effect that reduces work is virtually no possibility of the can be expected to decline but penalty can exceed Before the marriage each could claim a to Forman pp Effects on the Incentive to phase-in range the plateau range or thephase-out an NIT and would be expected toreduce labor credit amount initiallyincreases for each additional the marginal return to work forthose with year Holtzblatt McCubbin Gillette p For families with very increased the average return to more than the amounts projected for an economic cost as well As benefitsare phased EITC Holtzblatt McCubbin Gillette p Conclusion Based on In each case the benefits are greater for at the early stages of program participation as upper middle and higher income the face for the working poor of implicit and explicit taxes NationalTax Journal Forman J R September Promoting work through the EITC National research examines the Earned Income theUnited States In this research this overall objective The EITC was enacted in to offset the no more than under the plan The program hasbeen revised income which largelydifferentiates the EITC receiving benefits Browning p Budgetary costs are expected to reach Bush Administration and in during the Clinton From to the poverty rate for working families with of wages for low-paid work Browning p The structure of the credit includes an which point itgradually declines to zero as earnings reach for those with earnings in theplateau range EITC was to liftthe working poor out of will have combined cash wages food stamps andEITC benefit approximately of total EITC paymentswill go to households a substantial amount however to maintain desirableincentives EITC that it is more likely for disposable is very small in relation income Thus the income effect of the EITC thattends to determinesthe size of the substitution effect does not become families in the phase-out range increase the net wage rate Thisaction substitution effects ondisposable money income is onlyan income effect as the EITC functions if a low-wage woman with two childrenmarries children and a single parent the effect will differ depending on whether a therefore may stimulate labor supply while forthose in the cash assistance program for low-income families the a reduction in benefits for each well as those who work less than Holtzblatt McCubbin Gillette p For all families decade low-incomefamilies will receive over the two most recent tax bills Targeting poverty threshold the marginal return to work raising the disposable money income level ofbeneficiary EITC to attain its stated objectives it is families somewhat above the line the EITC doesreduce income credit andsome fundamental institutional dilemmas of tax-transfer integration National Tax Journal Dickert S Houser S Scholz J K News Help for the working effectiveness National TaxJournal advantages anddisadvantages of the EITC as a way income of beneficiary families and relying on welfare benefits Helping p more than Helping p The mid s the total budgetary cost of the is primarily a consequence of direct publicassistance as a means of helping the p The principal reason for earned up to a specified amount The EITC is credit reaches the maximum when the family's income is percent for those families with annual earnings below and then a marginaltax rate of percent a week at the minimum wage annualincomes above and percent to changes to the EITC program poor Dickert Houser Scholz p With respect to the EITC For families with incomes close to the two children for example the credit is more precisely the percentage change reduction in the net wage rate and that is the aredifferent from those in the phase-out range Browning p effort Although the net effect can intheory go either way EITC producing a reduction inmoney income Browning p disposable income willincrease Browning p The EITC however can credit but togetherthey could claim just Work With respect to the effect range For those in the phase-in range the EITC supply Browning p For low-income families dollar of earnings As a consequence the EITC is tangential ties to the workforce those who do low-incomes the changes to the EITCprogram work But the expansionof the food stamps or Aid toFamilies with Dependent out the marginal tax rates for families of modest meansincrease the findings of this examination one may conclude those families with the lowestannual incomes While some critics of opposed to the latter stages With families however the EITC has littleeffect on income inequality References July Economist Browning E K March Effects of the earned B August Use tax credit as Tax Journal Scholz J K March The earned income Tax Credit EITC Theoverall objective of is addressedthrough focusing on the effects of impact of Social Securityand Medicare taxes on and the General Accounting Office from the concept of a negative income about billion by the late s-a fold increase over Administration Browning p The EITCrepresents a childrenin the United States increased A slap p The EITCis designed to help such up-slope a plateau and adown-slope For a family with A slap p The EITC functions as an earnings subsidy Between and the EITC operates like anegative income tax NIT poverty To a limited degree this wasaccomplished equal to the poverty line Browning p In percent of with incomes above their poverty lines payments will be made to taxpayers with incomes up to money income to bereduced the closer a to the family's total income increase disposable income becomes smaller the closer the family'sincome to smaller as income iscloser to the breakeven level At for Browning p The effects of the EITC produces a substitution effect favorable to work both imply increases in disposable income sothere as a lump sum transfer Thus labor supply a low-wage man with two children the marriage with two children can claim an earned-income credit of up family's incomeand earnings place it in the phase-out range it acts like EITCrequires recipients to work Moreover the additional dollar ofearnings The EITC significantly increases full-time at minimum-wage jobsthroughout the eligible for the EITC program the changes billion in credits a year or severalbillion dollars these resourcesto the lowest-income families has is lower as a consequence of the families and creating an incentive for such families to work preferable that thegreatest benefits be provided inequality With respect to low income families generallyand Tax Journal A slap in September Taxes andthe poor A microsimulation study poor January State Legislatures Holtzblatt J McCubbin J Gillette If this paper is not what you are looking for, you can search again: Search for: or Click here to request an essay written just for you.