The development of the Earned Income Tax Credit (EITC) has been extraordinary. What started in 1975 as a minor amendment to a forget-table tax bill became in the 1980s one of the most popular programs in Washington. The national media and policymakers from both parties repeatedly praised the program. The New York Times, for example, hailed the EITC as “a wonderful but little-known anti-poverty weapon…the best means available for lifting the working poor out of poverty.” Republicans embraced the program as a superior alternative to welfare (meaning Aid to Families with Dependent Children), to a higher minimum wage, and to government-run day-care centers. President Bill Clinton made expanding the EITC central to his plans for reforming welfare, increasing the progressivity of the tax system, and improving the economic security of low-wage workers. One would be hard-pressed to find any government program that received such universal acclaim among political elites. By the early 1990s, it had become the policy equivalent of penicillin. Only in the spring of 1995, as congressional Republicans sought to balance the budget within seven years, did some policymakers seriously consider cutting this program.
Examining the Gap in the Earned Income Tax Credit