THE EARNED INCOME CREDIT: HISTORICAL PREDECESSORS AND CONTEMPORARY EVOLUTION

The Revenue Reconciliation Act of 1993 (RRA93) significantly expanded the earned income credit (EIC), which was changed to include low-income taxpayers without dependents. Evolving, most directly, from the "workfare" plan (1972) proposed by Senate Finance Committee Chairman, Rüssel Long, and in response to President Nixon's Family Assistance Program (FAP), the post-1974 EIC was not the first of its kind. It had two predecessors. The EIC of 1923 through 1931 benefitted taxpayers with or without dependents and excluded any "workfare" feature. A second EIC, in name only, was in effect for the 1934 through 1943 tax years. This paper develops a historical framework for study of the post-1974 EIC. This framework necessarily precedes any investigation of contemporary issues relating to the twenty-year history of the post-1974 EIC which, unlike its first predecessor, appears destined to continue as a permanent, expanding mechanism for the delivery of basic subsistence to the "working poor." The resolution of these contemporary issues will determine whether the post-1974 EIC is destined to replace or continue to co-exist with a (presumably) more costly welfare delivery system.