Which program is most effective at alleviating poverty by offsetting social security taxes?

• A. Child Tax Credit
• B. Earned Income Tax Credit
• C. Supplemental Security Income
• D. Temporary Assistance for Needy Families

Answer: (B)

The earned income tax credit is a wage subsidy built into the tax system for low- and moderate-income workers. It is a refundable credit that depends on earned income and family size, and it can produce a refund even if no tax is owed. This directly boosts after-tax income and lowers the net burden of payroll taxes (Social Security and Medicare) for low earners. Because of this design, it more effectively lifts working families out of poverty than other options, which either provide cash benefits not tied to payroll taxes or offer nonrefundable credits.