Tax Credits for the Working Poor A Call for Reform

The United States introduced the earned income tax credit (EITC) in 1975, where it remains the most significant earnings-based refundable credit in the Internal Revenue Code. While the United States was the first country to use its domestic revenue system to deliver and administer social welfare benefits to lower-income individuals or families, a number of other countries, including New Zealand and Canada, have experimented with or incorporated similar credits into their tax systems. In this work, Michelle Lyon Drumbl, drawing on her extensive advocacy experience representing low-income taxpayers in EITC audits, analyzes the effectiveness of the EITC in the United States and offers suggestions for how it can be improved. This timely book should be read by anyone interested in how the EITC can be reimagined to better serve the working poor and, more generally, whether the tax system can promote social justice.

Preface and acknowledgments; List of abbreviations; Introduction: rethinking the earned income tax credit; 1. A history of the EITC: how it began and what it has become; 2. Why the United States uses lump-sum delivery; 3. How inexpensive administration creates expensive challenges; 4. Importing ideas: case studies in design and administrability; 5. Reimagining the credit: why and how to restructure the EITC; 6. Making a case for year-round EITC delivery; 7. Protecting the anti-poverty element; 8. Beyond EITC delivery and administration: how the United States addresses poverty; Index.

Michelle Lyon Drumbl is Clinical Professor of Law at Washington and Lee University, Virginia and previously an attorney in the IRS Office of Chief Counsel. Her scholarship focuses on low-income taxpayers and fiscal policy. Her article examining earned income tax credit noncompliance, 'Beyond Polemics: Poverty, Taxes, and Noncompliance', was awarded the Cedric Sandford Medal for best paper at the 12th International Conference on Tax Administration in Sydney.