Policy Documents

Making Work Pay in New York: The Earned Income Tax Credit

Russell Sykes –
April 2, 2012

Low-income working families in New York State receive a significant annual wage supplement through the Earned Income Tax Credit (EITC), which is available to eligible filers of federal, state and New York City income tax returns.

More than 1.6 million households—nearly one out of every five in the Empire State—claimed total EITC payments of $4.6 billion in 2009, the latest year for which data are available. The combined federal, state and city tax credit in New York averages nearly $3,000 and provides a 44 percent income boost for a minimum-wage worker with two children.

This paper explores the history and impact of the EITC, compares its effectiveness as a poverty-fighting measure to the minimum wage, and identifies a number of areas where the EITC could be improved.

The author concludes the Earned Income Tax Credit is a more effective poverty-fighting measure than the minimum wage.