The Tax Foundation is the nation’s leading independent tax policy research organization. Since 1937, our principled research, insightful analysis, and engaged experts have informed smarter tax policy at the federal, state, and local levels.
The Tax Foundation is the nation’s
leading independent tax policy
research organization. Since 1937,
our research, analysis, and experts
have informed smarter tax policy
at the federal, state, and local
levels. We are a 501(c)(3) nonprofit
organization.
©2019 Tax Foundation
Distributed under
Creative Commons CC-BY-NC 4.0
Editor, Rachel Shuster
Designer, Dan Carvajal
Tax Foundation
1325 G Street, NW, Suite 950
Washington, DC 20005
202.464.6200
taxfoundation.org
Analysis of the
Cost-of-Living Refund Act of 2019
Key Findings
• Senator Sherrod Brown (D-OH) , Representative Bonnie Watson Coleman (D-
NJ), and Representative Ro Khanna (D-CA) introduced legislation to expand
the Earned Income Tax Credit called the Cost-of-Living Refund Act of 2019.
This legislation was recently reintroduced.
• The Cost-of-Living Refund Act of 2019 would reduce federal revenue by $1.8
trillion between 2020 and 2029 on a conventional basis.
• The Cost-of-Living Refund Act of 2019 would slightly reduce the overall
incentive to work, leading to 51,577 fewer full-time equivalent jobs and a
0.29 percent smaller economy in the long run.
• The effect the Cost-of-Living Refund Act of 2019 has on the incentive to
work would depend on how much income a tax filer earns. The proposal
would increase the incentive for low-income tax filers to work, leading to
822,788 more full-time equivalent jobs for that income group.
• The smaller projected economy over the next decade would result in slightly
lower revenue collections. As a result, we estimate that this proposal would
reduce federal revenue by $1.9 trillion between 2020 and 2029 on a dynamic
basis.
• The Cost-of-Living Refund Act of 2019 would greatly increase the
progressivity of the tax code by raising the after-tax incomes of the bottom
20 percent of taxpayers by 15.4 percent. Overall, taxpayer after-tax income
would rise by 1.5 percent.
FISCAL
FACT
No. 640
Mar. 2019
Kyle Pomerleau
Chief Economist and
Vice President of Economic Analysis
Huaqun Li
Economist
TA