Expand the earned income tax credit

Obama expands earned income tax credit for 2009 and 2010

Updated: Wednesday, February 25th, 2009 | By Angie Drobnic Holan

Expanding the earned income tax credit is a somewhat obscure point of tax law, but it's part of President Obama's stated goals to do more for working people.

Congress created the tax credit in 1975 to provide an incentive to work by giving a tax credit for low-wage and moderate-wage workers. But it has many rules and phase-outs. Obama's promise was to allow people to get more money through the tax credit by changing some of those rules.

The American Recovery and Reinvestment Act, the economic stimulus bill Obama signed Feb. 17, 2009, contains two rule changes that Obama promised: It increases the credit for people with three or more children, and it increases the credit for married people so they don't face a "marriage penalty" compared with other filers. But it does not expand the credit for workers without children.

Obama has fulfilled two of the three aspects of this promise, so it's a substantial portion of his original pledge, but not everything he said he would do. For now, we're going to rate it Compromise, but we'll be watching future budgets to see if the tax credit is expanded or scaled back, in which case we might need to change our ruling.

Sources: Thomas, The American Recovery and Reinvestment Act of 2009 , Sec. 1002, Feb. 17, 2009

Tax Policy Center, Taxation and the Family: What is the Earned Income Tax Credit? Dec. 11, 2008