Broadening Tax Credits To Aid Working Families

In a policy environment averse to direct spending on programs dedicated to income support, a variety of federal tax credits have emerged as key vehicles for providing assistance to low-to-moderate income families. Indeed, the two largest individual income tax credits—the Earned Income Tax Credit (EITC) and the Child Tax Credit (CTC)—will represent over $75 billion in tax expenditures in 2003. Looking for ways to expand the constituency for tax credits to include more "working families" with low-to-middle incomes, this paper reviews the current regime of tax credits, their design, and the political dynamics behind their appeal.