How to Simplify the Code for Low-Income Taxpayers May 12, 2009

Hosted by American Enterprise Institute.

The Earned Income Tax Credit, the Child Tax Credit, and the Making Work Pay Tax Credit are only three entries in the long list of tax credits devoted to lessening the tax burden on lower-income families. While these tax credits add greater tax progressivity to the American income tax system than is offered by the graduated statutory income tax rate schedule alone, they also add substantial complexity. In addition, they create substantial work disincentives for some low-income families by generating high marginal tax rates. What can be done to reduce the complexity and adverse work incentives associated with these credits without losing the additional progressivity they provide?

At this AEI event, Representative Tom Petri (R-Wisc.) will discuss the combined impact of low-income tax credits on work incentives. AEI director of economic policy studies Kevin A. Hassett and visiting scholar Lawrence B. Lindsey will present a paper they coauthored with AEI research fellow Aparna Mathur that provides a roadmap for replacing the current system of tax credits with a single low-income tax credit that would provide tax progressivity while reducing complexity and work disincentives. Codirector of the Urban-Brookings Tax Policy Center Rosanne Altshuler and Cato Institute director of tax policy studies Chris Edwards will comment. AEI resident scholar Alan D. Viard will moderate.

Official Website: www.aei.org/events/type.upcoming,eventID.1926,filter.all/event_detail.asp