Social Welfare Programs

I. Introduction

It can be said that the status of modern America is where it stands now on account of its wealth and economic power. In spite of this reality there is much disparity considering the affluent and the underprivileged. In order to bridge the seeming divide between the two classes, the government has placed measures where people can utilize opportunities for development and continued respectable existence of the underprivileged. The paper summarizes on the advantages of the EITC as a tool to help and aid people with financial concerns.

The Earned Income Tax Credit (EITC) is primarily a refundable tax credit that works in reducing or eventually eliminating taxes being paid by lower income classes. According to Meim, this likewise acts too as a conduit in facilitating a wage subsidy for low income workers (1987). It was enacted for several years beginning in 1975 where it became a major tax bill. The EITC began as a modest program that is designed to offset the Social Security payroll tax for low-income families with children. It became one of the biggest legislative landmarks in the US that caters to poverty alleviation which enjoys solid support from both parties in Congress.

For years both conservative and liberal experts traded insults over the poverty alleviation. The Liberals accused conservatives of extreme cold-heartedness. Meanwhile, conservatives claimed that liberal welfare policies coddled the poor and kept them from improving their lives. But the dawn of the early 1990s saw a significant softening of the long domestic cold war over antipoverty policies. Many liberals came to see merit in conservative themes of work and responsibility. On the other hand, some conservatives began to speak about helping working families and backed their words up with real spending. This bipartisan accommodation secures the place of EITC as a relevant social welfare program that is committed to support the poor.

II. Recipient of EITC in New York State

The success of the federal program of the EITC provides about 22 million American families with children an amount of $34 billion of cash assistance annually. In the year 2002, the New York state comprising of 793,340 households collected the EITC and received a total amount of $1,448,390,432, which is an average of $1,826 per household. On the other hand, the number of households in New York who missed out on their EITC benefits is between a low of 140,001 (15% of eligible households) and a high of 264,447 (25% of eligible households).

The situation in New York is comparatively low in the implementation of the EITC. "This is because there is a very poor awareness of the programme or otherwise they cannot get the help that they need to file a tax return" (Francis, 1998). Furthermore, money is lost when low-income taxpayers are aggressively and deceptively sold high cost bank products, including refund anticipation loans (RALs), Refund Anticipation Checks (RACs), or Assisted Direct Deposit.

According to Francis, the EITC has not lived up to its goal of providing low income workers, especially many who are poor, with extra income through the refund of taxes in New York (1998). The calculations would show that every increased dollar received by low and moderate-income families has a multiplier effect of between 1.5 to 2 times the original amount. Using the conservative estimate that for every $1 in EITC funds received, $1.50 ends up being spent locally. This would mean that the more than $255,598,312 that New York families are missing actually means $383,397,467 are effectively lost to low income neighborhoods in New York.

Statistics show that is has been effective in persuading single parents, especially the women, to obtain employment. They are the largest group of EITC recipients, typically in their early thirties with a high-school diploma, and with fewer than two children. The programme like wise promotes self sufficiency