There are few aspects of the 2013 tax reform in North Carolina that have drawn more criticism from Democrats and progressives than elimination of the Earned Income Tax Credit.

The EITC was designed to help low-income wage earners who file state income taxes, giving them a credit against their tax liability. The credit was refundable, meaning that if the amount of the credit was greater than the amount of taxes due, it would result in the state sending a check to the filer in the amount of the difference. This converted at least a portion of the credit into a direct subsidy.

The EITC’s elimination has been seen by the political Left as part of an overall change in the tax code meant to eliminate progressivity. But viewing the elimination of the EITC in isolation instead of as part of overall tax reform misses the point, although it likely serves their partisan purposes.

Elimination of the EITC, as noted, was part of an overall income tax reform plan and was based on sound economic analysis. The idea was to lower and flatten tax rates for all, including the lowest wage earners, eliminate special tax incentives, and simplify the tax code, reducing everyone’s tax compliance costs.

This process of reform has continued since 2013 with rates being lowered again last year by a quarter percent from 5.75 percent after the 2013 reforms to 5.499 percent with further reforms in 2015. Prior to the 2013 legislation, the top marginal rate was 7.75 percent and the lowest rate was 6 percent.

The EITC was eliminated in this context. It added complexity and compliance costs for lower-income workers and opened up the system to fraud and calculation errors that could both shortchange taxpayers or find them receiving more credits than they should.

It was recognized that the EITC’s benefits for lower-income workers could be achieved more efficiently with a simpler system that included large zero tax brackets, i.e., personal exemptions and increased child tax credits. Lost tax benefits for lower-income workers from eliminating the EITC were more than made up for by a combination of a reduction in rates and a more than doubling of the standard deduction and per child tax credits.

It has been estimated that for families earning under $25,000, including the elimination of the EITC, the total savings from the 2013 changes was $157 million or about $79 for the average household in that income group. For families earning between $25,000 and $50,000 the total saving is $192 million or $68 per family.

The biggest boost for low-income wage earners came with the increase in the personal exemption from $6,000 to $15,000 for a couple filing jointly. This means that a low-income couple, filing jointly, with an income of $40,000 was now paying an effective tax rate of only 3.6 percent, more than 2 percentage points below the statutory rate, and this is before taking the child tax credit or realizing any other deductions. The child tax credit was increased from $60 to $125 per child.

The Left has part of this equation right. The best way to increase real spendable earnings for low-income families is through the tax code, by recognizing, as does Article I, Section 1 of the N.C. Constitution, that the fruits of one’s labor are rightfully his or hers. Indeed, this is the path that has been taken by the legislature over the last several years. The disagreement seems to be over the means, not the ends.

Instead of making use of the EITC, the legislature has decided to continue to avoid its complexities and potential for error or fraud and expand the use of tax exemptions. For example, in 2016 the zero tax bracket was increased even further to $17,500, almost triple what it was in 2012. With the statutory rate of 5.499 percent that will go into effect as of January 2017, the effective rate of the family earning $40,000 will fall to about 3 percent.

Additional steps can be taken. In addition to further increases in the zero tax bracket for families, the possibility of increasing the per-child tax credit should also be examined. This would have two advantages. First, it is consistent with the idea of tax simplification. In other words, it can be done without adding any new complexities.

Second, it is consistent with improving the tax code’s economic efficiency. Part of the original plan for tax reform was to remove double taxation of saving and capital investment. The fact is that in the long run children are a contribution to what economists call human capital, and therefore at least a portion of income spent on child rearing can be viewed as long-term investment. That should, ultimately, be exempt from taxation since it will generate an income stream in the form of future earnings that the child, when he or she becomes an adult, will generate.

What this means is that an increase in the per-child tax credit can be justified, not only on the more humanitarian grounds of helping those at the bottom rung of the income ladder, but also because of justification in sound economic analysis.

Dr. Roy Cordato (@RoyCordato) is vice president for research and resident scholar at the John Locke Foundation.