The Dual Origins of the Earned Income Tax Credit: Theorizing Indirect Assistance at the Subnational Level

Carmen Brick, University of California, Berkeley

Existing theories of indirect assistance derive from a significant transformation of the U.S. welfare state at the federal level—the growth of the Earned Income Tax Credit (EITC) between the 1970s and 1990s as welfare declined—and point to 3 reasons for this transformation including cost-cutting, the policy design advantages of indirect assistance, and the U.S. cultural valuation of work over welfare. While these theories help to explain the growth of the EITC at the federal level, these theories do not encompass the growth of indirect assistance at the state level, where the EITC’s trajectory departs significantly from that of the federal credit. The patterns of EITC adoption and growth at the state level indicate a more complex story about how the EITC became a core component of the U.S. welfare state, which this paper begins to explore by comparing the trajectory of the first state-level EITC with the trajectory of the federal EITC. As a result of this comparison, the paper makes three contributions: (1) it argues that competing liberal restructuring and conservative retrenchment projects led to the growth of indirect assistance as liberals attempted to gain a new comprehensive system of social protection and conservatives opportunistically used expansions of indirect assistance to hide the redistributive harms of their policies, (2) it shows that the ambiguity and invisibility of indirect assistance had negative effects on the ability of liberal actors to achieve more comprehensive social protection and (3) it draws attention to the importance of subnational policymaking to the ascendancy of indirect assistance.

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 Presented in Session 66. Neoliberalism and Class Politics