WASHINGTON (July 11, 2014) –The R Street Institute today welcomed the introduction by Rep. Cory Gardner, R-Colo., of the Earnings Advancement and Recovery Now Act, or EARN Act.

By its own estimate, the federal government made $14.5 billion in improper EITC payments last year alone, which accounts for 24 percent of the program. The legislation aims to reduce misdirected spending and dedicate the savings to expanding credit for working families.

“The Earned Income Tax Credit has proven to be one of the most effective ways to lift hard-working families out of poverty,” said Lori Sanders, R Street outreach director and senior fellow. “The EARN Act takes important steps toward curbing the recognized problem of improper payments, which is an essential part of making the credit work for more Americans. We applaud Rep. Gardner’s willingness to address this issue and encourage his colleagues to both support these reforms and to think creatively with regard to protecting and expanding this crucial anti-poverty tool for those who need it most.”

Sanders cautioned that the bill is only a first step and that more should be done to simplify the EITC and increase oversight to ensure accuracy in payments.

“We need to make it simpler to ensure that everyone who deserves the tax credit is able to understand and access it, but curtailing willful abuse is crucial to ensuring that its impact isn’t undermined by fraudulent claims. By reducing improper payments, we will be able to expand the credit to reach a larger population, particularly working noncustodial parents in need of additional help,” she said.

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