EITC for All: A Universal Basic Income Compromise Proposal

Authors

Benjamin M. Leff, American University Washington College of LawFollow

Abstract

Much has been written about a concept called universal basic income (UBI). With a UBI, the government gives every person a certain amount of money each year, or even each month. The UBI has broad appeal with thinkers on both the right and the left, but the appeal is partially because different thinkers have different visions of what the current state of affairs is with respect to government welfare policies and different theories about why these existing policies are inadequate or damaging. Reforming existing programs, rather than making a radical break with the past, could satisfy at least some of the interests that motivate support for a UBI. The purpose of this Article is to explore the possibility of modifying the Earned Income Tax Credit (EITC), the largest and arguably most popular U.S. anti-poverty government transfer program, in order to capture at least some of the benefits associated with the UBI. This Article explores four problematic aspects of the EITC, each of which could be modified to make it function more like a UBI. These four aspects are: (1) the EITC creates disincentives to work for the so-called “nearly poor” because the credit phases out at moderately low income levels; (2) the EITC is fundamentally dependent on family structure, which is potentially unfair, invasive, and affects incentives to marry, divorce, and cohabitate; (3) receipt of the EITC benefit is temporally mismatched with recipient need, expensive for recipients to collect, and difficult for the IRS to administer because the EITC is integrated with the tax system; and, finally, (4) the EITC is too small to fully function as a hedge against underemployment and poverty. Modifying the EITC would make it more like a UBI and would make it more effective at achieving the goal of supporting financially struggling workers and their families while minimizing perverse incentives.

Recommended Citation

Benjamin M. Leff, EITC for All: A Universal Basic Income Compromise Proposal, 26 Wash. & Lee J. Civ. Rts. & Soc. Just. 85 (2019).
Available at: https://scholarlycommons.law.wlu.edu/crsj/vol26/iss1/4