Since its introduction in 1975, the earned-income tax credit (EITC) has been one of our nation's most effective anti-poverty policies. A new article we co-authored in the Fall 2012 issue of Democracy: A Journal of Ideas entitled "Tax Policy: Spreading the Benefits More Widely," explores how this powerful anti-poverty program can do even more. We argue that linking the Earned Income Tax Credit with long-term savings opportunities can expand financial security among low-income people.
In the same way that retirement and college savings programs have been effective at promoting and supporting savings for those with higher incomes, the EITC can serve as the basis for asset building for families with lower incomes by linking refunds to automated and incentivized savings opportunities. The result would be a powerful new way to spur positive financial behavior for millions of economically vulnerable families.