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Extending the EITC to Noncustodial Parents: Potential Impacts and Design Considerations

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Publication Date: June 2009

Publisher(s): Tax Policy Center

Author(s): Laura Wheaton; Elaine Sorensen

Special Collection: John D. and Catherine T. MacArthur Foundation

Topic: Banking and finance (Taxation and tax policy)

Keywords: Child Support; Families/Parenting; Tax Policy; Taxes and Social Programs

Type: Paper

Abstract:

This paper examines the noncustodial parent earned income tax credit (NCP EITC), a new type of credit recently enacted in New York and Washington, D.C. and proposed by Senator Bayh and then-Senator Obama in 2007. The NCP EITC offers an earned income tax credit to low-income noncustodial parents who work and pay their full child support. This paper describes the rationale for this policy and provides national estimates of the benefits and costs of an NCP EITC under three alternative policy scenarios. It also discusses several key design and implementation issues.