Former House Speaker Ryan Calls EITC ‘Best Tool in the Arsenal’ for Economic Mobility
WASHINGTON, D.C. — As Congress grapples with the challenges of government spending levels and bipartisan tax deals, one policy that has consistently been at the center of discussions for promoting America’s 21st-century economy is the Earned Income Tax Credit.
According to Paul Ryan, former speaker of the House, on hand at the Bipartisan Policy Center to discuss economic security for working families, the impending reopening of the federal tax code in 2025 may be an opportunity to consider enhancements to the EITC.
Enacted by President Gerald Ford in 1975, the EITC was originally a temporary offset for lower-income workers in response to the Social Security payroll tax and 70s stagflation. The credit was made permanent in 1978 but has undergone multiple transformations.
It has enjoyed bipartisan support for its role in boosting employment rates and lifting millions out of poverty each year.
“If you are pushing for a society that is known for upward mobility, and you are striving for equality of opportunity, the best tool in the arsenal that we have today is the EITC,” Ryan said.
“This is as much of a no-brainer policy as I have ever seen,” agreed Jamie Dimon, JPMorgan Chase CEO and chairman.
“There are so many tax breaks out there that shouldn’t be there,” Dimon said. “[EITC] is a no-brainer to lift up society and I would pay for it by taxing the wealthy a little bit more.”
According to the IRS, four out of five eligible workers claim and receive their EITC, but the amount of the EITC depends on the amount earned from working, marriage status and the number of qualifying children.
The average amount of EITC received nationwide in tax year 2022 was about $2,541.
In addition to the federal EITC, 31 states, the District of Columbia, Guam and Puerto Rico have enacted additional state earned income tax credits.
Ryan and Dimon spoke about BPC’s EITC recommendations, including simplifying rules to increase take-up rates, encouraging the millions of people not taking advantage of this credit to do so.
Saying the EITC “has proven to be very effective,” Ryan emphasized that technology is the key to enhancing the program’s efficiency further.
“The reason we couldn’t fix this when I was running the committee that deals with this, is technology,” he said. “By now, surely technology can solve this problem; Can make sure that [the credit] goes to who it needs to go to… Can clear up waste, fraud and abuse.”
Doubling down on his criticism of the Treasury Department’s “terrible data system,” Ryan said that with the right software, EITC could be a “monthly or biweekly” credit “embed[ed] in a person’s paycheck.”
In addition to addressing the shortcomings of the current data systems and software at Treasury, Dimon prefers any updates to the EITC “get rid of the child requirement,” which Ryan has also previously endorsed, and simplifying the credit as a straightforward benefit.
“It is either that or universal basic income. Those are the two debates in front of us,” Ryan said. “Smooth disincentives and focus on individual customized benefits that get people to work.”
Still, paying for these credits remains a concern for Republican lawmakers.
“People… think that these things should be inherently non-governmental,” Ryan said, “but let’s put private sector intellectual capital to work. That does take a bit of a philosophical jump for some, but if we can get over that, we’re going to have a great 21st Century.”
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