Franklin Roosevelt and the Forgotten History of the Earned Income Tax Credit

The Green Bag, Second Series, Volume 20, Number 4, Page 337, Summer 2017

13 Pages Posted: 16 Oct 2017

See all articles by Bryan Camp

Bryan Camp

Texas Tech University School of Law

Date Written: August 6, 2017

Abstract

On his 1934 income tax return, Franklin Roosevelt claimed an "earned income credit" of $1,400. We usually think of the Earned Income Tax Credit (ETIC) as a subsidy for the poor. This article recovers the original history of the credit back when it was a subsidy for the rich, or at least wealthy taxpayers who earned their wealth through their labor. The purpose of this credit, which lasted up until WWII, was to offset the huge tax preference given to wealthy taxpayers whose income came from capital. The article traces the credit from its inception to its demise and then links it to the current EITC to show some surprising connections between the two credits over time and social change. Both are linked to the foundational tax policy concept of "ability to pay" although in different ways.

Keywords: Income Tax, Franklin Roosevelt, Time Value of Money, Tax Subsidies, Tax Expenditures, Earned Income, Tax Credits, EITC, Tax History

JEL Classification: K34

Suggested Citation

Camp, Bryan T., Franklin Roosevelt and the Forgotten History of the Earned Income Tax Credit (August 6, 2017). The Green Bag, Second Series, Volume 20, Number 4, Page 337, Summer 2017. Available at SSRN: https://ssrn.com/abstract=3048006

Bryan T. Camp (Contact Author)

Texas Tech University School of Law ( email )

1802 Hartford
Lubbock, TX 79409
United States

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