Expanding Childless Worker Tax Credits Increases Participation

This sounds like a good idea on the face of it but I think we need to stop spending, not increase it. If expanding the credit would really encourage employment just to get the credit, great, but would the expansion of the work force and the taxes from the expansion be more the a break even or a net loss for increased revenue?

Relaying on the average worker to contemplate going back to work just to gain a possible future reimbursement on their decision to go back to work sound dubious at best. Why not just say 'we, the government, will send you a check if you go back to work instead of a tax credit?'

I think it's called a bribe. That has possibilities.

Should Congress Expand the Childless Worker Earned Income Tax?
Source: Angela Rachidi, "Balancing the Trade-offs: Options for Expanding the Childless Worker Earned Income Tax Credit," American Enterprise Institute, June 2015.

June 5, 2015

Expanding the childless worker earned income tax credit (EITC) has received a great deal of attention in the past several years. Supporters believe it will increase labor force participation and employment, as well as reduce poverty among key demographic groups. There are many ways in which an expansion could be designed.
Some key points to consider:

• Proposals for an EITC expansion for childless workers vary in terms of the size of the credit, the earnings limits for eligibility and eligibility exclusions.
• An expansion of the EITC for childless workers could reach 8-14 million workers and cost $5-8 billion in new spending, depending on whether students are excluded and work requirements are adopted. A more generous option could reach 21 million workers but would require as much as $22 billion in new spending.
• Young people (ages 21-24) are the primary beneficiaries of proposed expansions, as are men, who would receive approximately 55-60 percent of benefits from any expansion. Women, older workers and married couples also benefit, but to a lesser extent.
• Student exclusions and work requirements would lower costs but may be difficult to administer.

When thinking about the proper amount and reach of a childless worker EITC, the costs must be balanced. For labor force participation and employment outcomes to improve, the credit needs to be large enough to encourage people into the labor market, but a large credit may be cost prohibitive.