The earned income tax credit provides a much-needed wage subsidy to many low-income workers. Unfortunately, the credit is not available to workers under age 25 or over age 65 unless they have young children.

Although we need older Americans to work longer and desperately want young men and women to join the work force, the current credit sends exactly the wrong message. Congress should act immediately to extend the earned income tax credit to old and young workers.

The earned income credit helps offset burdensome Social Security taxes, and it provides an additional subsidy for low-income workers with children. In 2007, for example, a low-wage single mother can claim a refundable earned income credit of up to $4,716. For a minimum-wage worker, that’s a wage subsidy of more than $2 per hour. The credit has encouraged millions of low-income mothers to choose work over welfare.

A smaller credit – up to $428 in 2007 – is available to childless workers, but only if they are over age 25 and under age 65.

During the tax season, I help many low-income workers prepare their tax returns, and I’m constantly amazed by the impact of these peculiar age limits.

I recently helped a 66-year-old woman who made $6,500 cleaning houses. Had she been under 65, she could have claimed a $412 credit on her 2006 return. Because she was over 65, she got no credit. And while she owed no federal income tax, she had to pay almost $1,000 in Social Security taxes, more than 15 percent of her self-employment earnings.

Many low-income workers like her have paid Social Security taxes for more than four decades. They should not lose the earned income credit just because they work past age 65. And remember, most of us will have to work until age 67 before we will be allowed to claim full Social Security benefits.

I have also helped many young workers file their first tax returns. These young men and women typically have $4,000 or $5,000 of earned income, but they are too young to claim the earned income credit.

The IRS estimates that we have a federal income tax gap of $345 billion a year, and much of that gap is attributable to workers failing to report their under-the-table wages. If we want young workers to join the federal tax system for life, we should let them claim the earned income credit.

Extending the earned income credit to young workers would also encourage them to choose honest work over the “wages of crime.” According to the U.S. Department of Justice, there were more than 2.1 million Americans in prison or jail in 2005, up from just a half a million in 1980. Almost 90 percent of those incarcerated are men, and many are young men from disadvantaged backgrounds. We should spend our revenue encouraging those young men to seek honest work, not building more prisons to house them.

In short, Congress should extend the earned income tax credit to workers over age 65 and under age 25. And to provide even greater work and filing incentives, Congress should raise the maximum credit to $1,000 per worker. That would get us a fairer tax system, a more productive work force and greater taxpayer compliance.