Tax Analysts provides news, analysis and commentary on tax-related topics, including social welfare policy issues related to low-income taxpayers, like the child tax credit described in section 24 and the earned income tax credit described in section 32.
Supporters of the credits, including groups like the Center on Budget and Policy Priorities and Citizens for Tax Justice, believe the credits help families.
The Government Accountability Office and Treasury Inspector General for Tax Administration, however, have raised concern about improper payments under the Earned Income Tax Credit.
Congress enacted the Child Tax Credit in 1997 to help working families offset the cost of raising kids, and it has grown with bipartisan support since, according to the Center on Budget and Policy Priorities. The Earned Income Tax Credit was introduced in 1975 and was meant as a credit to offset payroll taxes for low-income families, but has been recast as a work incentive and has grown steadily over time, according to the IRS.
Lawmakers renewed expansions of the credits as part of the American Taxpayer Relief Act of 2012 but those extensions are scheduled to run out in 2017, according to a summary on the Senate Finance Committee’s website.
Recent proposals in Congress have called for making those extensions permanent, and for changing the credits themselves.
Overclaim rates for the Earned Income Tax Credit have drawn Congressional attention. While the IRS found in 2014 that overclaims stabilized between 1999 and the period between 2006 and 2008, the Government Accountability Office has, in a report, cited IRS figures saying about 27 percent of Earned Income Tax Credit payments in 2014 were improper.
The refundable portion of the Earned Income Tax Credit is one of America’s four largest programs benefiting low-income people in terms of expenditures, while the Additional Child Tax Credit is one of the ten largest, according to a Congressional Research Service report, which found that low-income spending jumped in 2008 and 2009 because of the recession.
