A Policy Equity Analysis of the EITC

Reducing poverty for the 9.12 million children in the United States who are growing up without the basic resources needed to thrive is a stated goal of policymakers, researchers and advocates. Our safety net policies that work for many families—like the Earned Income Tax Credit (EITC) and Child Tax Credit—do not in their current design go far enough in lifting children out of poverty, and deep inequities exist by nativity and race/ethnicity in poverty rates and access to anti-poverty policies.

One group of children is systematically and disproportionately excluded from the EITC: children in immigrant families, who make up a full 44% of children in poverty. Nearly all of these children are U.S. citizens themselves, but those with a family member without a Social Security number are ineligible for the EITC. At a fundamental level, efforts to reduce poverty in the United States will be unsuccessful if they do not include these children.

Announcing our new report

Our new report, A Policy Equity Analysis of the Earned Income Tax Credit: Fully including children in immigrant families and Hispanic children in this key anti-poverty program, offers a comprehensive look at how to improve the EITC and significantly lower child poverty equitably by ensuring that children in immigrant families, many of whom are Hispanic, can fully access this program.

Our report builds on the landmark 2019 NASEM report A Roadmap to Reducing Child Poverty to present a policy equity analysis of the EITC, focusing on the unequal treatment of U.S. citizen children in immigrant families in the design, capacity and effectiveness of the program. We present new estimates of the poverty reducing effects of an increase of EITC benefits and changes in eligibility rules for families without Social Security numbers.

We find that increasing EITC benefits by 40% and extending eligibility to families without Social Security numbers would lift an additional 2.09 million children out of poverty—mainly Hispanic children and children in immigrant families, who have some of the highest poverty rates in the U.S.

In 2021, the temporary expansion of the Child Tax Credit (CTC) led to a surge of research and publicity on the importance of ensuring the CTC is effective and equitable. Much less attention, however, has been paid to the EITC, which for 50 years has had a proven positive effect on reducing child poverty and improving child outcomes, with wide support across the ideological spectrum. With this report, we aim to start a conversation on how to equitably expand the Earned Income Tax Credit to alleviate child poverty.