	Introduction

The earned income tax credit (EITC), when first enacted in 1975, was a modest tax credit providing financial assistance to low-income working families with children. Today, the EITC is one of the federal government's largest antipoverty programs, having evolved through a series of legislative changes over the past 40 years. Since the EITC's enactment, Congress has shown increasing interest in using refundable tax credits for a variety of purposes, from reducing the tax burdens of families with children (the child tax credit), to helping families afford higher education (the American opportunity tax credit), to subsidizing health insurance premiums (the premium assistance tax credit). The legislative history of the EITC may provide context to current and future debates about refundable tax credits. An Overview of the History of the EITC

Major legislative changes to the EITC over the past 40 years can generally be categorized in one of two ways: those that increased the amount of the credit by changing the credit formula or those that changed eligibility rules for the credit, either expanding eligibility to certain workers (for example, certain servicemembers) or denying the credit to others (for example, workers not authorized to work in the United States). Together, these changes reflect congressional intent to expand this benefit while also better targeting it to certain recipients. Before Enactment

The origins of the EITC can be found in the debate in the late 1960s and 1970s over how to reform welfare—known at the time as Aid to Families with Dependent Children (AFDC). During this time, there was increasing concern over the growing numbers of individuals and families receiving welfare. Instead, Senator Long proposed a "work bonus" plan that would supplement the wages of poor workers. The "work bonus plan" was renamed the earned income tax credit and was enacted on a temporary basis as part of the Tax Reduction Act of 1975 ( P.L. 94-12 ). As originally enacted, the credit was equal to 10% of the first $4,000 in earnings. Hence, the maximum credit amount was $400. The credit phased out between incomes of $4,000 and $8,000. In addition to encouraging work and reducing dependence on cash welfare, the credit was also viewed as a means to encourage economic growth in the face of the 1974 recession and rising food and energy prices. This law also increased the maximum amount of the credit to $500. Subsequent increases in the amount of the credit in 1984 ( P.L. Eligibility for the credit was also expanded to include childless workers. 103-66 ). 104-193 ) and the Taxpayer Relief Act of 1997 ( P.L. 107-16 ) reduced the EITC marriage penalty by increasing the income level at which the credit phased out for married couples. Expanding the EITC for Families with Three or More Children

In addition to expanding marriage penalty relief, ARRA also temporarily created a larger credit for families with three or more children by increasing the credit rate for these families from 40% to 45%. As previously discussed, a taxpayer must provide an SSN for themselves, their spouses (if married), and any qualifying children.
The earned income tax credit (EITC), when first enacted on a temporary basis in 1975, was a modest tax credit that provided financial assistance to low-income, working families with children. After various legislative changes over the past 40 years, the credit is now one of the federal government's largest antipoverty programs. Since the EITC's enactment, Congress has shown increasing interest in using refundable tax credits for a variety of purposes, from reducing the tax burdens of families with children (the child tax credit), to helping families afford higher education (the American opportunity tax credit), to subsidizing health insurance premiums (the premium assistance tax credit). The legislative history of the EITC may provide context to current and future debates about these refundable tax credits.
The origins of the EITC can be found in the debate in the late 1960s and 1970s over how to reform welfare—known at the time as Aid to Families with Dependent Children (AFDC). During this time, there was increasing concern over growing welfare rolls. Senator Russell Long proposed a "work bonus" plan that would supplement the wages of poor workers. The intent of the plan was to encourage the working poor to enter the labor force and thus reduce the number of families needing AFDC.
This "work bonus" plan, renamed the earned income tax credit, was enacted on a temporary basis as part of the Tax Reduction Act of 1975 (P.L. 94-12). As originally enacted, the credit was equal to 10% of the first $4,000 in earnings. Hence, the maximum credit amount was $400. The credit phased out between incomes of $4,000 and $8,000. The credit was also viewed as a means to encourage economic growth in the face of the 1974 recession and rising food and energy prices.
Over the subsequent 40 years, numerous legislative changes have been made to this credit. Some changes increased the amount of the credit by changing the credit formula. Major laws that increased the amount of the credit include the following:
P.L. 101-508, which adjusted the credit amount for family size and created a credit for workers with no qualifying children; P.L. 103-66, which increased the maximum credit for tax filers with children and created a new credit formula for certain low-income, childless tax filers; P.L. 107-16, which increased the income level at which the credit phased out for married tax filers in comparison to unmarried tax filers (referred to as "marriage penalty relief"); and P.L. 111-5, which increased the credit amount for families with three or more children and expanded the marriage penalty relief enacted as part of P.L. 107-16.
Other legislative changes changed the eligibility rules for the credit. Major laws that changed the eligibility rules of the credit include the following:
P.L. 103-66, which expanded the definition of an eligible EITC claimant to include certain individuals who had no qualifying children; P.L. 104-193, which required tax filers to provide valid Social Security numbers (SSNs) for work purposes for themselves, spouses if married filing jointly, and any qualifying children, in order to be eligible for the credit; and P.L. 105-34, which introduced additional compliance rules to reduce improper claims of the credit.
Together, these changes reflect congressional intent to expand this benefit while also better targeting it to certain recipients.