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The Earned Income Tax Credit: Current Issues and Benefit Amounts. Date: September 1, 2000 1 (September 1, 2000)

handle is hein.tera/crstax0405 and id is 1 raw text is: Order Code RS20470 Updated September 1, 2000 The Earned Income Tax Credit: Current Issues and Benefit Amounts Melinda T. Gish Analyst in Social Legislation Domestic Social Policy Division Summary Thie earnied income tax credit ( EITC), established inI the tax code in1 1975, offers cid;ld to\workl~iii !Iiiniipents\\Itwiih relatiNeNlow incomesw c eforidepenidetitlilldre n (Smal ler cred its b iI 19 94foilow\iiiii oiies\-i I nocildren.) The EIT(C is the onIy federal cashi aid I\a lable to atI work 111 ( iinpoor fimilies\\ iti ciIdiei. For elgible filers w\ith income tax liability, the EITC reduces thecir taxes. However, most of the credits go to those wh lo owNe eithier no0 talxes or,11L amouts s1mller thanI the Ir cred its. Thiese people receive lump-sum credits in the form of p.S. Treasury checks at the end of the tax year. A small miniority (less thani 5%(') of E ITC c laimiants receiv\e advanmce cred its\ withl thleir pay~checks. To be eligible for the advance EITC, the employee must hiave a qu~iflitNg 1( cild. IIn January, 2000, PreCsident Clint1ton annlounced a prioposal to expand the EITC. InI its FY200 1 budguet, the Admnhistration estinmates the cost of thlat proposal to be $1 1.5 billion over 5 years. Mlost recentty, the President vetoed marriage penialty legislationi (HI.R. 48 10),\ whichI incCluded priov isionis to miodify the IEITC. Thiis shiort report I i udated pieriodically ais legislative activity and newN prog:rami data require. Recent Developments On August 5, 2000, President Clinton vetoed the Marriage Tax Relief Reconciliation Act of2000 (H. R. 4810). The Senate had approved the conference report on July 21, 2000, one day after the House approved the measure. The bill would have increased the EITC phase-out limit for married couplesfilingjoint returns by $2,000, in an effort to prevent low-income couples who marry and file jointly from seeing a reduction in their EITC benefits. This provision would have become effective in tax year 2001 and would have sunset on December 31, 2004. Earlier, on June 28, 2000, the Senate Committee on Finance approved a version of the Marriage Tax ReliefReconciliation Act of2000 that would have increased the EITC income phase-out limitfor married couplesfilingjoint returns by $2,500, rather than the $2,000 amount agreed to in conference and included in the bill vetoed by the President. With the exception of the sunset date, the provision as reported out of committee mirrored Congressional Research Service +* The Library of Congress CRS Report for Congress Received through the CRS Web

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