Obama 2016 Budget: Low-Wage Workers Get A Boost Under The President's Proposal

Millions of low-income workers could haul in some extra cash under President Obama’s latest budget proposal. Among other sweeping tax reforms, the White House budget for the 2016 fiscal year includes a significant expansion of the earned-income tax credit, or EITC, for workers without children.

Under existing rules, these wage-earners can receive a top annual credit of $496 -- less than a sixth of what workers with children are allowed to reel in each year. Obama’s proposal would double the EITC for “childless” earners.

Historically, this group of wage-earners hasn’t benefited much from the four-decade-old tax credit.

“They’ve been left out in the sense that their benefits have been very small compared to workers with children,” said Isabel Sawhill, co-director of the Center on Children and Families and the Budgeting for National Priorities Project at the Brookings Institution.

The president's budget also calls for expanding earned income tax credit eligibility to workers making up to 150 percent above the poverty line and to those age 21-24. Existing rules set limits at 120 percent above the poverty line and to workers at least 25 years of age.

Under current rules, a 23-year-old janitor with an annual income of $16,000 is ineligible. Under the president’s proposal, that same worker would be able to receive the new tax credits. In all, the reforms would benefit 13.2 million workers, the White House said.

Unlike a good chunk of the budget’s other major reforms -- for instance, a hike in the tax on capital gains -- EITC expansion may well gain some traction in the 114th Congress.

“One of the significant things is that it’s something Republicans have shown some interest in,” Sawhill said. “There’s a chance it could actually happen.”

House Ways and Means Committee Chairman Paul Ryan, R-Wis., who is well respected on the GOP side when it comes to budgetary matters, has previously expressed support for expanding the earned-income tax credit. Like-minded conservatives support the program for what they consider its work incentive-based structure.

On the other hand, Obama and Republicans will likely clash over how exactly to pay for any overhaul.