H.R.905 - EITC Modernization Act (119th Congress)
Summary
H.R. 905, the EITC Modernization Act, aims to expand the Earned Income Tax Credit (EITC) to include all taxpayers with dependents and qualifying students. It modifies the Internal Revenue Code of 1986 to broaden the definition of qualifying dependents and introduces a minimum credit for students and individuals with certain qualifying dependents. The bill also proposes a monthly payment option for EITC recipients and establishes return preparation programs for low-income taxpayers.
Expected Effects
The bill's passage would likely increase the number of individuals and families eligible for the EITC, providing additional financial support to low- and middle-income households. It could also simplify tax preparation for some by offering a monthly payment option and improving access to return preparation assistance. The expansion of the EITC may stimulate local economies as recipients spend the additional income on immediate needs.
Potential Benefits
- Increased financial support for low- and middle-income families through an expanded EITC.
- Reduced child poverty by supplementing the earnings of low-wage workers.
- Improved access to tax preparation assistance for low-income individuals through the establishment of volunteer programs.
- Potential economic stimulus as EITC recipients spend their increased income.
- Simplification of tax refunds through a monthly payment option.
Potential Disadvantages
- Potential for increased complexity in determining eligibility for the expanded EITC.
- Risk of fraud or errors in claiming the credit, particularly with the broadened definition of qualifying dependents.
- Potential administrative burden and costs associated with implementing the monthly payment option.
- Possible strain on government resources due to increased EITC claims.
- The bill does not address the long-term fiscal impact of the EITC expansion.
Constitutional Alignment
The bill aligns with the Constitution's mandate to "promote the general Welfare" (Preamble) by providing financial assistance to low- and middle-income families. Congress has the power to lay and collect taxes, duties, imposts and excises, to pay the debts and provide for the common defense and general welfare of the United States (Article I, Section 8, Clause 1). The expansion of the EITC falls under Congress's authority to tax and spend for the general welfare.
Impact Assessment: Things You Care About ⓘ
This action has been evaluated across 19 key areas that matter to you. Scores range from 1 (highly disadvantageous) to 5 (highly beneficial).