Earned Income Tax Credit in the US and Its Inspirations for China’s Personal Income Tax Reform

Abstract

AbstractThe personal income tax is an important tax tool for regulating income distribution. In order to alleviate the poverty of low-income people and further promote equity, it is necessary for China to further reform the personal income tax. This article introduces the details, operation mode and eligibility criteria of the US Earned Income Tax Credit, and analyses its effects in alleviating poverty, encouraging employment, reducing crime rates and maintaining marital stability. The article also discusses the feasibility of the EITC policy in China and provides a new idea for the reform of China's personal income tax, taking into account the current situation of China's personal income tax reform and social security policies for the low-income group.KeywordsEITC policyPersonal income taxLow-income groups