In Focus: Refundable Tax Credits
Jul 31, 2013 | Permalink »
House Subcommittee Learns about Strengthening the Safety Net
By Helly Lee
Today, the House Subcommittee on Human Resources held a hearing on improving the safety net. Witnesses described what improvements are needed to the nation's safety net programs, but more importantly, one witness highlighted what is already being done in their state to better serve families.
Safety-net programs are critical resources for millions of working families across the country who struggle to make ends meet. Programs such as the Temporary Assistance for Needy Families (TANF), Supplemental Nutrition Assistance Program (SNAP), Medicaid and the Children's Health Insurance Program (CHIP) and the Child Care and Development Block Grant (CCDBG) can make a significant impact in the lives of low income families. These safety net programs have been shown to lift millions above the poverty line, support working adults to stay in the workforce by supplementing low wages, and promote the success of children in school and later in life. However, many people can be confused by how to enroll in these programs and encounter numerous barriers when navigating these complex and bureaucratic systems.
This is why innovative efforts such as the Work Support Strategies (WSS) initiative, are key to helping policy makers, administrators and other stake holders improve and better serve families to get and keep the supports for which they are eligible. WSS is a multi-state effort in partnership with three national organizations, the Ford Foundation and three other philanthropic partners. WSS seeks to design, test and implement 21st century public benefits systems that would dramatically improve the delivery of work support benefits to low-income families. This involves creating and incorporating more effective, streamlined and integrated approaches to how service is delivered.
Jun 24, 2013 | Permalink »
The Unfinished Work of “Making Work Pay”: Expanding the EITC for Childless Workers
The city of New York recently announced a plan to test the effects of expanding the Earned Income Tax Credit (EITC for low-income childless workers. The four-year pilot program will offer up to $2,000 in refunds for three consecutive years to participants earning $26,000 per year or less. The city is in the process of developing the details of the pilot, including phase-in and phase-out tax rates and age qualifications.
The EITC is one of the most effective anti-poverty and pro-work programs in the United States, lifting 5.7 million people out of poverty in 2011, including 3.1 million children However, childless workers, including non-custodial parents, benefit the least from the federal EITC program, receiving no more than $475 a year. Moreover, they lose eligibility for the EITC if they earn just $14,340 or more a year. This means that a minimum wage worker working full-time, year round still earns too much to qualify for the EITC. According to Wider Opportunities for Women's basic economic security table, in the US the average cost of living for a single childless worker (whose employer provides benefits) is $29,004, which is much higher than both the EITC income cut off and the current federal poverty threshold.
The New York City pilot program will test the possibility of using an expanded EITC for childless workers to fight poverty and promote work among adults without dependents, including noncustodial parents. Expanding the EITC to include noncustodial parents could promote financial security for children. The pilot program also hopes to address the disproportionate number of young men who are not participating in the labor market and/or those who work in low-wage jobs.
Current trends show a rise in low-wage jobs, particularly among low-income adults. Therefore, expanding the EITC could increase both workforce participation among childless workers -- especially those with low-wages and fewer skills – and income among this demographic. New York City’s pilot program, if expanded to the rest of the country, could benefit millions of households. While federal legislation has attempted to expand the EITC for childless workers, the New York City pilot program is the most promising new development in promoting employment and increased income for low-wage workers regardless of family status. This effort to “make work pay” is one that has great potential for working poor in the Big Apple and beyond.
Apr 15, 2013 | Permalink »
Highlighting State EITC Efforts on Tax Day
It’s tax day and for many months now, Volunteer Income Tax Assistance (VITA) sites across the country have assisted working families with their taxes in time to meet today’s deadline. By filing taxes, many low wage workers and families are able to get important refundable tax credits. Among these is the Earned Income Tax Credit (EITC), one of the largest anti-poverty programs having reached more than 27 million families and individuals in 2012 and that has far-reaching work, income and health benefits for its recipients. In fact, EITC lifted 6 million people out of poverty in 2011, according to the latest Supplemental Poverty Measure.
Because of the federal EITC program’s proven anti-poverty success, many states have adopted similar state-level Earned Income Tax Credits added onto the federal EITC. Low-income families and individuals who are eligible for the federal EITC are also eligible for the additional state EITC. Currently, 26 states provide a state EITC, 23 of which provide a refundable or partially refundable EITC. In facing tough budget decisions, however, many states have turned to the EITC as a place to cut costs while other states are pushing for improvements to their state programs.