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A lot of attention is being paid to Millennials, who, unlike their parents’ generation, are bucking the trend of graduating directly into lucrative jobs, settling down, buying a house and having 2.5 kids. Millennials, defined as young adults born between the early 1980s and early 2000s, are instead moving back in with their parents, struggling to find work and as a result not making big purchases like cars and homes, not getting married as young, and not having children until much later in life, if at all. While this pattern may not hold for every member of this young generation, statistics indicate that most Millennials are struggling financially. Could a tax credit help all that?
Different Priorities
Millennials’ parents grew up in a different generation. The milestones of life seemed natural—even inevitable—to Baby Boomers. According to Moyers and Company, it’s not that Millennials don’t want the nice job, big house and other big ticket items, it’s that they can’t afford them. This young generation is chronically under-employed or entirely unemployed, and earnings for this age group are on the paltry side. For a generation more concerned with the how many Twitter followers they have than how much is in their 401k, it makes sense that the weight given to these traditional milestones wouldn’t be the same as their parents’ generation, for whom success was defined by those milestones.
Can a Tax Credit Help?
Enter the proposal of a tax credit for this young generation: the Earned Income Tax Credit. As it stands now, this tax credit is extended only to struggling families who earn some money but not nearly enough to live on, says BloombergBusinessweek. It helps them navigate their way up the income brackets to cut down on poverty rates, offering incentives to get back to work. The problem is that, while the tax credit helps families, it leaves struggling young, childless adults out in the cold. Yes, these Millennials may qualify for different—smaller—tax credits if they’re under 25, but this only aids those most likely to still rely on their parents financially.
Coincidentally, the EITC excludes adults between 18 and 24 with no children, who don’t live with their parents and who don’t go to school. Yet this segment of the population is falling through the cracks, going broke because they simply can’t get by in this economy with what they have available to them. Generation Progress is one group looking to make the EITC available to young Millennials through more generous phase-in and phase-out periods to assist these adults in the margins. Crucially, the EITC is not an open-ended type of financial care; it’s just a means for young and emerging adults to get some help until they’re financially stable enough to support themselves.
Would the Credit Be Enough?
It’s hard to say whether a single tax credit would be enough to help an entire generation that’s struggling. Social welfare programs already in existence, like food stamps and social security, cut the poverty rate in the United States significantly. It’s possible that extending the EITC to Millennials will give them just the boost they need to begin lives filled with success.