Obama urges doubling tax credit for low-income childless workers

WASHINGTON, Feb 9 (Reuters) - U.S. President Barack Obama on Tuesday proposed expanding the earned income tax credit (EITC), which helps low-income taxpayers, to give a bigger boost to childless people.

Some Republicans as well as Democrats in Congress back increasing the tax credit. House of Representatives Speaker Paul Ryan, a Republican, favors expanding the credit as an incentive for pulling people into work.

In his budget blueprint for the fiscal year starting Oct. 1, Obama proposed doubling the tax credit for workers who are not raising children, bringing the credit to a maximum of about $1,022 a year for them.

He said it should be expanded to cover workers with earnings up to 150 percent of the poverty line, so about $18,180 for a single person. Under current law the cutoff comes at about $15,040.

Obama also favors expanding eligibility to single workers between ages 21-24 to help draw them into the workforce; currently they must be 25 to qualify.

The Earned Income Tax Credit, created in 1975, is intended to promote work as well as help low-income people. Because it is a refundable credit, it produces a refund if the taxpayer does not owe any taxes.

Currently it gives more generous benefits to families with children. Obama has proposed expanding it for the past two years; Ryan agrees it should be increased for childless workers.

But they disagree on how it should be funded. Obama has talked about closing tax loopholes, while Ryan has talked about cutting spending.

Obama’s budget proposed making the credit available to workers aged 65 and 66, and to workers in the struggling territory of Puerto Rico.

The White House said its proposal would help 13.2 million low-income people. The Congressional Research Service (CRS) said recently that in 2013, a total of $68.1 billion was claimed by 28.8 million tax filers under the program.

But it said the rules were too complex and up to a quarter of payments were issued “improperly”.

Obama’s budget also proposed $12 billion over 10 years to supplement food stamps for poor families when school meal programs are closed in the summer.

It asked for $2 billion in emergency aid for families in crisis, a $1.2 billion increase in rental assistance to poor families, $328 million in education and housing grants to poor neighborhoods, and a $15 million pilot program to help poor families move to better neighborhoods. (Reporting by Susan Cornwell; Editing by Chizu Nomiyama)