WASHINGTON, D.C. – U.S. Sen. Sherrod Brown (D-OH) and U.S. Rep. Ro Khanna (D-CA) introduced joint legislation in the Senate and House today that would give working families a much-deserved wage boost to compensate for 40 years of wage stagnation.
The Grow American Incomes Now (GAIN) Act would expand the Earned Income Tax Credit (EITC) so that more working families and childless workers are eligible to receive it. It would also let workers claim a one-time advance EITC payment so workers don’t have to turn to predatory, expensive payday loans.
“Americans are working longer hours, but too many aren’t seeing that hard work reflected in their pay. And worse – our tax system can actually tax workers into poverty. That’s not how we grow our middle class or our economy,” said Brown, who is introducing the bills as part of his plan to make hard work pay off again. “Updating the EITC will make sure all workers can keep more of the money they earned for their work.”
“The EITC is already proven at lifting people out of poverty. By strengthening it to reach more families and individuals, it can have a lasting impact on our economy,” said Khanna. “In today's age of automation and globalization, where work is sometimes seasonal and hours are often curtailed, this bill provides every hard-working American with a fair income for their labor.”
The GAIN Act roughly doubles the EITC for working families and increases the credit for childless workers almost sixfold. Under the proposal, the maximum tax credit available increases to $12,131 for families with three or more qualifying children; $10,783 with two qualifying children; $6,528 with one qualifying child; and $3,000 with no qualifying children. Currently, a family of three can receive a maximum credit of $6,318 and someone with no children can receive at most a $510 tax credit.
The proposed EITC expansion would also be phased out at higher income levels and remain fully refundable. It would allow for a worker with no children who makes up to $37,113 annually to still be eligible to receive the tax credit and covers a family with three or more children making up to $75,940 a year to receive the EITC. The current maximum qualifying income to receive the EITC is $15,010 for childless workers and $48,340 for families with three or more children.
The bill also recognizes many Americans live paycheck to paycheck and includes a provision that would provide an Early Refund EITC as an alternative to payday loans and other predatory lending products, which typically carry exorbitant fees and charges. Payday loans are generally made to individuals who are working and often eligible for the EITC. The average payday loan is about $375. This provision of the bill aims to breaks the cycle of debt by offering workers to annually claim a one-time, $500 advance on the EITC for the following taxable year. The bill also lowers the qualifying age for the EITC from 25 years old to 21 years old.
The value of hard work has declined in the United States, with wages and benefits declining or stagnating. This spring, Brown unveiled a proposal aimed at increasing the value of work so all workers can share in the wealth they create. Brown wants to increase access to and the value of the EITC and CTC so all eligible workers can keep more of the money they’ve earned.
Brown has also introduced the Working Families Tax Relief Act to expand access to and the value of the EITC and Child Tax Credit (CTC), and to ensure that no worker can be taxed into poverty by the federal tax system. In the year-end tax package in 2015, Brown helped secure a permanent expansion of the EITC and CTC.
Brown has been a leader in the Senate on expanding the EITC program, and worked to make the program permanent through the tax extenders package in 2015. Over several years leading up to 2015, Brown successfully worked with Republicans to ensure that the 2015 tax extenders package would not include business tax cuts without making EITC permanent. For just as long, Senator Brown has been working on efforts to provide working families with access to small-dollar advance EITC payments.