Skip to main content Accessibility help
×
Home
Hostname: page-component-768dbb666b-x9ds4 Total loading time: 0.373 Render date: 2023-02-05T00:38:52.821Z Has data issue: true Feature Flags: { "useRatesEcommerce": false } hasContentIssue true

eight - The Earned Income Tax Credit as an anti-poverty programme: palliative or cure?

Published online by Cambridge University Press:  03 February 2022

Gaby Ramia
Affiliation:
The University of Sydney
Kevin Farnsworth
Affiliation:
University of York
Zoë Irving
Affiliation:
University of York
Get access

Summary

Introduction

The Earned Income Tax Credit (EITC), a federal rebate provision of the US tax code, is heralded as that nation's largest anti-poverty programme for low-income, working families (Berube, 2006; Holt, 2006). Notwithstanding more than 35 years of EITC implementation, poverty still plagues American families and children. While the EITC has been lauded for increasing labour force participation, particularly for lone mothers, and for lifting working families up to the federal poverty level (Greenstein, 2005; Acs and Toder, 2007), the short-term cash benefits of the EITC do not appear to support long-term economic gains for poor working families (Rainwater and Smeeding, 2003; Dowd and Horowitz, 2011). Additionally, the constraints of many low-wage jobs restrict the time and financial resources that parents can invest in promoting the development and success of their children (Dodson and Albelda, 2012). These limitations of the EITC as a ‘making work pay’ policy may have implications for workfare policies in other industrialised nations, such as the new Universal Credit in the UK.

The EITC is recognised as an integral part of the new ‘workfare’ state by incentivising work for parents with limited skills and education, but less well known is the EITC's prominent role as a wage supplement that reaches working households below and above the poverty line. The EITC's function to prop up low wages in response to international economic competition challenges conventional thinking about its explicit purpose as an anti-poverty programme. While the EITC provides much-needed income support to working families, income alone, as a subsidy for chronic low wages, is not enough to prevent many children of programme beneficiaries from experiencing deprivation that is likely to limit their life chances and adult earning potential (Heckman and Masterov, 2007), thereby reproducing poverty in the next generation (Sachs, 2011). Additionally, there is a growing consensus that poverty is not defined solely by income; it is more aptly described by a constellation of deprivation factors (Wilson, 1987). If poverty is to be surmounted in future generations, the federal anti-poverty agenda will need to blend income supports for parents with other forms of social assistance, and promote policies that build the human capital of their children.

Type
Chapter
Information
Social Policy Review 25
Analysis and Debate in Social Policy, 2013
, pp. 149 - 166
Publisher: Bristol University Press
Print publication year: 2013

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

Save book to Kindle

To save this book to your Kindle, first ensure coreplatform@cambridge.org is added to your Approved Personal Document E-mail List under your Personal Document Settings on the Manage Your Content and Devices page of your Amazon account. Then enter the ‘name’ part of your Kindle email address below. Find out more about saving to your Kindle.

Note you can select to save to either the @free.kindle.com or @kindle.com variations. ‘@free.kindle.com’ emails are free but can only be saved to your device when it is connected to wi-fi. ‘@kindle.com’ emails can be delivered even when you are not connected to wi-fi, but note that service fees apply.

Find out more about the Kindle Personal Document Service.

Available formats
×

Save book to Dropbox

To save content items to your account, please confirm that you agree to abide by our usage policies. If this is the first time you use this feature, you will be asked to authorise Cambridge Core to connect with your account. Find out more about saving content to Dropbox.

Available formats
×

Save book to Google Drive

To save content items to your account, please confirm that you agree to abide by our usage policies. If this is the first time you use this feature, you will be asked to authorise Cambridge Core to connect with your account. Find out more about saving content to Google Drive.

Available formats
×