The Earned Income Tax Credit (EITC) suffers from two competing issues: incomplete take-up and overclaims—some eligible people do not claim the credit while some ineligible people do. This Note applies concepts from behavioral economics to these issues to determine why existing reforms have had limited success and what can be done to address them. This Note proposes the creation of an “opt-out” EITC system in which the IRS automatically determines EITC eligibility and the harmonization of the EITC audit rate with the national audit rate, accompanied by a bundle of existing EITC reform proposals.

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