The Earned Income Tax Credit (EITC) provides substantial benefits to low-income working families with children and has been found to reduce Black–White income inequality, but individuals without resident children receive very little benefit and are ineligible if under the age of 25. Young adults tend to “fall through the cracks” in safety net programs in part due to the assumption that they have access to parental resources. Wheaton and colleagues will examine whether the temporary expansion of the EITC in 2021 and a potential permanent expansion of the EITC would reduce racial income inequality among young adults. They will also examine the benefits and drawbacks of different methods of measuring the effect of a policy change on inequality. The study will use the Urban Institute’s TRIM3 microsimulation model, a comprehensive model of the U.S. social safety net that simulates the major benefit and tax programs, including the EITC, applied to data from the Census Bureau’s Current Population Survey Annual Social and Economic Supplement. The team plans to produce a policy paper and a methodological paper, and they will distribute findings through the Urban Institute’s Department of Communications and the Brookings Institute Tax Policy Center.
Would a permanent expansion of the Earned Income Tax Credit to young adults without children reduce racial and ethnic income inequality?
