MDRC in the News

D.C. Pols Who Want Tax Reform Should Look at This NYC Experiment

Next City

09/2017

Critics of the social safety net in the U.S. often assert that public assistance like food stamps and subsidized housing decreases a recipient’s incentive to work. There’s now even more evidence that such assertions are wrong, based on an early look into the results of an experimental study with the earned income tax credit (EITC).

The EITC is the primary employment-based antipoverty program in the United States. Research shows that the tax credit is effective, helps to reduce race-based income gaps, and supports local economies.

The program reduces the amount of federal income tax owed at tax time (or yields a tax refund) for many low-income families. How much of a tax credit a person can claim is based on income and household size.

Conducted in New York City, the “Paycheck Plus” experiment tested the effects of dramatically increasing the EITC for single adults with no dependent children. It found that the promise of a higher maximum didn’t cause recipients to reduce their overall earnings from work…..

…..“The fact that single people working in low-wage jobs are treated differently by the current Earned Income Tax Credit from those with children raises questions of equity,” MDRC President Gordon Berlin said in a statement announcing the findings. Some D.C. lawmakers are looking at expanding the EITC program, to benefit more U.S. workers, including single people…..

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