Making work pay - expansion of the Earned Income Tax Credit

Washington Monthly, April, 1994 by Preston Lerner

* It's too little too late: Actually, an advance-payment mechanism--a W-5 form--already exists. The reason that less than onehalf of 1 percent of all EITC beneficiaries use it is many Americans have a sweet tooth for year-end tax-refund candy. "I don't want it a little bit at a time," says Nancy Martinez, who could afford to drop off the AFDC rolls and get a job only because of the EITC windfall she receives. "To me, [the lump-sum refund] is something I can use to catch up on bills." The IRS hopes to enlist more W-5 converts through a new program that allows taxpayers to take some of their benefits in their paychecks and still receive a year-end refund.

There are other niggling problems with the EITC. For example, no provisions are-made for families with more than two children. And because eligibility is based on annual income rather than hourly wages, a high-dollar consultant working part-time can qualify. But the harder you scrutinize the potential solutions, the better the Earned Income Tax Credit looks. To paraphrase Churchill on democracy, it's the worst anti-poverty measure around--except for all the others.

PRESTON LERNER is Los Angeles-based journalist.