Today, the Millennial generation, or those born between 1980 and 2000, lag behind previous generations at the same age in critical measures of economic welfare such as employment, income, and poverty. In fact, a higher percent of Millennials live in poverty today, regardless of education, than the immediate previous generation at a similar point in their lives.
Despite the grim economic reality, one of the largest and most effective antipoverty programs, the Earned Income Tax Credit (EITC), excludes young and childless adults.
Lawmakers must ensure policies like EITC, which has a strong track record of lifting workers out of poverty and moving its beneficiaries from poverty to work, include more young Americans who are facing historic economic strife. Not only does it make sense to support policies that expand economic opportunity for more Americans, but 81 percent of Millennials and 77 percent of the American public support expanding tax credits, like EITC, that help families with low-wage jobs to reduce poverty and increase economic outcomes.
This report outlines how it works, the EITC’s track record of success, how it misses young and childless workers, and why and how EITC should be expanded.
Specifically, we believe lawmakers should improve the Earned Income Tax Credit for young, childless workers by taking eight key actions:
1. Lowering the eligibility age for childless workers to 18 years old.
2. Increase the maximum credit for childless workers.
3. Significantly boost the credit’s phase-in and phase-out rates, as well as the credit’s phase-out range.
4. Utilize EITC to trigger student loan assistance and financial aid.
5. Create an EITC rainy day fund to curb predatory lending and capitalize on upward mobility opportunities.
6. Encourage broader use of EITC as a way for young people to build savings.
7. Make the American Recovery and Reinvestment Act of 2009 EITC enhancements permanent.
8. Expand EITC awareness programs.