Earned Income Tax Credit

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The Earned Income Tax Credit is a negative income tax designed to give money to poor people with jobs without using the welfare system. Originally called the "negative income tax," it was first proposed by conservative economist Milton Friedman in 1960, and enacted into law under Republican president Jerry Ford in 1977 and expanded by Ronald Reagan in 1986. People with incomes under $37,000 file income tax returns and instead of paying an income tax to the government they get a check from the government. Depending on the number of dependents and the income earned, checks typically are in the range of $2000 to $3000. The refund phases out as income goes above $16,000. About 20% of eligible families fail to take the credit. Those who did participate received $40 billion in 2008.[1]

Further reading


  1. See Congressional Budget Office estimates