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1 (June 9, 2003)

handle is hein.crs/crsuntaaibh0001 and id is 1 raw text is: Order Code RS21477 Updated June 9, 2003 CRS Report for Congress Received through the CRS Web The Earned Income Tax Credit (EITC): Policy and Legislative Issues Christine Scott Specialist in Tax Economics Domestic Social Policy Division Summary The Earned Income Tax Credit (EITC or EIC) began in 1975 as a temporary program to return a portion of the social security taxes paid by lower income taxpayers, and was made permanent in 1978. In the 1990s, the program became a major component of federal efforts to reduce poverty, and is now the largest anti-poverty entitlement program. Preliminary 2001 data show a total for the EITC of $32.5 billion and 19.4 million recipients, yielding an average tax credit of $1,680. Most of the EITC (83.7%) was received as a refund to low income workers. Legislation has been introduced in the 108'h Congress related to three policy issues for the EITC: the marriage penalty (H.R. 210, H.R. 407, H.R. 1612, S. 96, S. 120, S. 135); family size adjustment (H.R. 936, H.R. 1782, and S. 448); and compliance (H.R. 22, H.R. 936, H.R. 1661, H.R. 1782, H.R. 1894, S. 448, S. 685, S. 755, S. 1173, S. 1174, and H.R. 1308 as amended by the Senate). This report will be updated as legislative activity warrants. The Earned Income Tax Credit (EITC)l The EITC is a refundable tax credit available to eligible workers earning relatively low wages. Under current law there are two categories of EITC recipients: childless adults and families with children. Because the credit is refundable, an EITC recipient need not owe taxes to receive the benefits. An EITC eligible family may also receive a portion of the credit in the form of advanced payments. Eligibility for, and the size of, the EITC is based on income, age, residence, and the presence of qualifying children. Congressional Research Service +** The Library of Congress 1 A more detailed description of EITC eligibility and the calculation of the credit are in CRS Report RL31768, The Earned Income Tax Credit (EITC): an Overview, by Christine Scott.

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