The possibility of a British earned income tax credit

Robert Walker () and Michael Wiseman
Additional contact information
Robert Walker: Institute for Fiscal Studies and University of Nottingham

Fiscal Studies, 1997, vol. 18, issue 4, 401-425

Abstract: The possibility of an earned income tax credit, based on the US model, is currently high up the British political agenda. This paper examines the strengths and weaknesses of the current British system of in-work benefits, before reviewing the effectiveness of the US Earned Income Tax Credit (EITC) scheme. The British and US systems are then directly compared in terms of the net income delivered and the effective tax rate (net benefit deduction rate). Although the evidence in favour of a US-style EITC is weak, two possible variants are considered. The paper concludes that the only future for an EITC is probably as a partial scheme, linked to the amalgamation of in-work and out-of-work benefits, which removes wage subsidisation from the sphere of social security by means of a semi-individualised tax credit. Even so, the same goals could be achieved through the benefit system.

JEL-codes: H24 I38 (search for similar items in EconPapers)
Date: 1997
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

Downloads: (external link)
http://www.ifs.org.uk/fs/articles/fswalwis.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ifs:fistud:v:18:y:1997:i:4:p:401-425

Ordering information: This journal article can be ordered from
The Institute for Fiscal Studies 7 Ridgmount Street LONDON WC1E 7AE

Access Statistics for this article

More articles in Fiscal Studies from Institute for Fiscal Studies The Institute for Fiscal Studies 7 Ridgmount Street LONDON WC1E 7AE. Contact information at EDIRC.
Bibliographic data for series maintained by Emma Hyman ().