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Unformatted text preview: This PDF is a selection from a published volume from the National Bureau of Economic Research Volume Title: Means-Tested Transfer Programs in the United States Volume Author/Editor: Robert A. Moffitt, editor Volume Publisher: University of Chicago Press Volume ISBN: 0-226-53356-5 Volume URL: http://www.nber.org/books/moff03-1 Conference Date: May 11-12, 2000 Publication Date: January 2003 Title: The Earned Income Tax Credit Author: V. Joseph Hotz URL: http://www.nber.org/chapters/c10256 3.1 Introduction The Earned Income Tax Credit (EITC) grew from $3.9 billion in 1975 (in 1999 dollars), the first year it was part of the tax code, to $31.5 billion in 2000. No other federal antipoverty program has grown at a comparable rate. In 2000 EITC spending was within $4 billion of the combined federal spending on Temporary Assistance for Needy Families (TANF) and food stamps. 1 The growth of the EITC has been even more striking given the antipathy most Americans express toward welfare, at least prior to welfare reform in 1996, and the rhetoric of both political parties about recognizing the limitations of government programs. 2 The EITCs popularity relative to means-tested cash transfers like the former Aid to Families with Depen- 141 3 The Earned Income Tax Credit V. Joseph Hotz and John Karl Scholz V. Joseph Hotz is professor of economics at the University of CaliforniaLos Angeles and a research associate of the National Bureau of Economic Research. John Karl Scholz is professor of economics and director of the Institute for Research on Poverty at the Uni- versity of WisconsinMadison and a research associate of the National Bureau of Economic Research. The authors thank Robert Mo tt for guidance; Janet Holtzblatt for comments and for teaching them a lot about the earned income tax credit over the years; Dan Feenberg and the National Bureau of Economic Research for putting TAXSIM on the Web; and Janet Mc- Cubbin, Bruce Meyer, Je ff rey Liebman, John Wolf, and conference participants for helpful suggestions. 1. The fiscal year (FY) 2002 budget showed total food stamp spending in 2000 at $18.3 bil- lion and total TANF spending at $18.4 billion. 2. Views on welfare are illuminated by questions on the General Social Survey, which asks, Are we spending too much money, too little money, or about the right amount on welfare? In the 197282 surveys, 54.8 percent of the respondents replied too much. In the 1996 sur- vey, 57.7 percent replied too much, although the percentage giving this response had fallen to 45.8 percent in 1998 and to 38.9 percent in 2000. dent Children (AFDC) and new TANF programs stems, at least in part, from the perception that the EITC rewards work....
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EITC - This PDF is a selection from a published volume from...

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