Upcoming legislation builds off CAP proposal to create an early access provision for the EITC, helping hardworking Americans avoid predatory lending products such as payday loans.
Washington, D.C. — Today, Rebecca Vallas, Associate Director of the Poverty to Prosperity Program at the Center for American Progress, applauded the news that Sen. Sherrod Brown (D-OH) plans to introduce legislation to allow working Americans to access a portion of their Earned Income Tax Credit, or EITC, in advance of tax time. Analysis conducted by CAP’s Poverty to Prosperity program shows that if the EITC remains unchanged, 833,000 Ohioan and 23.6 million American households would be able to access a substantial Early Refund EITC—$500 for families with children and $133 for workers without children.
Sen. Brown’s proposal to allow Americans to access a portion of their Earned Income Tax Credit ahead of tax time means that many workers—some of whom live paycheck to paycheck—will not be forced to turn to predatory lending products, such as payday loans, just to make ends meet. The EITC is already one of the nation’s most effective anti-poverty tools, so strengthening this program is a common-sense proposal that should win support among Democrats and Republicans alike in the new Congress.
In October, CAP released a report with new policy proposals to harness the EITC as a tool for financial empowerment and upward economic mobility for working Americans, including the creation of an early-access provision that allows workers to access a small portion of their EITC ahead of tax time so they do not have to rely on predatory lending products and can take advantage of mobility-enhancing opportunities. Additional proposals put forth by CAP in the report include strengthening the EITC as an asset-building tool for families that wish to use their tax refunds to build savings, as well as harnessing the EITC to increase access to higher education and training through categorical eligibility for the maximum Pell Grant and reforms to strengthen the American Opportunity Tax Credit.
Related Resources:
Harnessing the EITC and Other Tax Credits to Promote Financial Stability and Economic Mobility by Rebecca Vallas, Melissa Boteach, and Rachel West
For more information or to speak with an expert, please contact Allison Preiss at [email protected] or 202.478.6331.
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