Now is the Time: Congress Must Protect EITC and CTC For All Working Families
By Helly Lee
The Earned Income Tax Credit (EITC) and the Child Tax Credit (CTC) are critical supports for low wage earners and families living in poverty. Both are refundable credits, meaning that workers who earn too little to owe federal income taxes can still receive the value of the credit. Both have been shown to significantly reduce poverty. In 2014, the EITC and CTC reduced overall poverty by 3.1 percentage points and child poverty by a remarkable 7.1 percentage points. In addition to being critical poverty reduction programs, the EITC and CTC have been shown to promote work and support children’s development.
Critical improvements to the EITC and CTC are set to expire at the end of 2017. These provisions include marriage penalty relief, a modestly larger EITC for families with three or more children, and allowing low-income workers to qualify for the refundable CTC starting at $3,000 (rather than the $14,700 that would otherwise be needed to qualify). These changes help ensure that work pays for the lowest-income workers. More than 16 million people in working families, including 8 million children would fall into – or deeper into – poverty if policymakers fail to save these critical provisions.
As Congress considers corporate tax extenders in the upcoming weeks, possibly as a part of an omnibus spending bill at the end of the year, it is essential that extending the improvements to the EITC and CTC be part of that deal. While the credits have historically received bi-partisan support, earlier this year the House Ways and Means Committee moved other tax extenders without these provisions. It is unconscionable to provide tax breaks benefitting large corporations while leaving out the tax credits that are critical to helping low-income families and children. In addition, Congress must not do any harm toward immigrant families and their children by changing eligibility requirements for the CTC and EITC or make it impossible for workers to file and pay their taxes by imposing unreasonable requirements for obtaining their Individual Tax ID Number (ITIN). Efforts to change eligibility requirements will devastate up to 4.5 million children in low-income working families.
The time is now for Congress to make the improvements to the EITC and CTC permanent and to ensure that all working families are able to access these critical credits.