Purging the Marriage Penalty

A Valentine’s Day present from the federal government? It could happen. No, I’m not talking about flowers or candy. I’m talking about getting rid of the “marriage penalty” that’s built into one of our biggest welfare programs.

That program is the Earned Income Tax Credit. The EITC is the nation’s second largest means-tested cash welfare program. EITC, unlike other welfare programs, is structured to give incentives to work. But reforms are needed to help it better achieve that purpose — and to ensure that it doesn’t discourage marriage.

EITC provides “refundable” tax credits to low-income individuals. What’s a “refundable tax credit,” you may ask? It’s simply a cash welfare grant to individuals who have no federal income tax liability.

 Historically, around two-thirds of the families with children receiving the EITC are single parents, and one-third are married couples, according to welfare expert Robert Rector. The average value of an EITC payment to a family with children was $2,919.

Now, there are several problems with the EITC program that need to be addressed. Fraud is rampant, for one thing. Erroneous overclaims account for at least a quarter of the $59 billion in annual EITC spending.
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