Final answer:
The discussion examines how the earned income tax credit (EITC) is structured to minimize the poverty trap by phasing out benefits slowly as earnings increase, specifically for low- to moderate-income working families with dependent children.
The information also provides a historical perspective on income tax policy in the United States.
Step-by-step explanation:
The question deals with the taxation of a dependent child's unearned income and how the earned income tax credit (EITC) phases out.
Although the specific tax mechanics for a dependent child with $2,100 of unearned income in 2019 were not directly mentioned, the question provides an opportunity to discuss the EITC, which is designed to help low- to moderate-income working individuals and families, especially those with children.
For a single-parent family with two children, there is initially no reduction in the EITC as earnings increase up to a certain threshold, after which the credit is reduced slowly until it phases out at an income level that is deemed sufficiently high.
This slow phase-out is meant to avoid a poverty trap, where each additional dollar earned results in a nearly equal reduction in government support, thus discouraging work.
Moreover, the question elaborates on the historical context of income tax in the United States, such as the changes brought about by the Revenue Act of 1942. It also touches on concerns regarding low wages and how they can impact a family's expenses.
Understanding these principles is essential for comprehending how tax policies aim to support working families while encouraging continued participation in the workforce.