Fighting Poverty and Expanding Opportunity: The Earned Income Tax Credit in NYC

EXECUTIVE SUMMARY

The Earned Income Tax Credit (“EITC”) is one of the most successful and celebrated antipoverty programs in United States history. In 2011, the combination of federal, state, and local EITCs provided over $2.5 billion to New York City residents.

President Obama recently proposed a significant expansion of the Earned Income Tax Credit as part of his 2015 Executive Budget. The proposal, which would expand eligibility by amending age and income restrictions, is designed to lift 500,000 Americans out of poverty and provide needed resources for an additional 10 million Americans living in poverty.

Should Congress pass an expansion of the EITC, working families and individuals across the country would directly benefit. The Council of Economic Advisors projects that under the President’s proposal 7.7 million workers would be eligible for a larger credit, while 5.8 million workers would be newly eligible for the EITC. 1 The non-partisan Brookings Institution seconds these findings and notes that an expanded EITC would have a pronounced effect in the nation’s urban centers, estimating that 61 percent of people who would benefit from a stronger EITC for childless workers live in the nation’s 100 largest metro areas, with nearly 650,000 residents of the NYC-Metro area expected to benefit.

This report, by New York City Comptroller Scott M. Stringer, highlights the history of the EITC and finds that the President’s proposed expansion would have the following effects on New York City:

• Providing an additional $250 million in Federal benefits to 365,000 households.
• Making 350,000 childless New York City households eligible for a credit up to $1,005, an average of $800 per filer.
• Making 15,000 low-income workers aged 21 to 24 and 65 to 66 in New York City newly eligible for the credit.
• Raising an estimated 40,000 New York households out of poverty.
• Increasing the total benefit to poor and working class families in New York City to over $2.9 billion per year when combined with State and City EITC programs, thereby raising the incomes of many of the City’s hard working residents who have seen their wages stagnate as the cost of living has continued to rise.

The following report charts the substantial economic and social impact the President’s proposals would have in New York City and urges Congress to pass an expansion to the EITC that would benefit those who most need help.