EITC Earned Income Tax Credit
Elections bring out the differences between Americans–and that’s especially true in 2016. But as we move forward after a campaign that many of us have found dispiriting, if not distressing, it’s a good time to recognize that Democrats and Republicans have not always disagreed when it comes to helping America’s lowest paid workers and their families. Perhaps we can build on past agreements to find our way back together in the coming months and make bipartisan progress to help struggling workers. One tax credit with a long history of bipartisan support, the Earned Income Tax Credit (EITC), has had a major impact in promoting work and reducing poverty in America. But it does little to nothing for millions of struggling workers not raising children. As a result, many of these workers are pushed deeper into poverty by federal taxes each year.
Expanding the EITC to include these workers and ensure that they are no longer taxed into poverty should be a top priority for both parties next year. The EITC has helped low-wage workers and their families since it was enacted in 1975 by a Democratic Congress and signed by Republican President Gerald Ford. The EITC offsets federal payroll and income taxes and allows low-income workers to keep more of their hard-earned money at tax time. The EITC is such an effective anti-poverty tool because it helps workers make ends meet in the moment and creates a powerful incentive for people to work more in the future (because the size of the EITC grows with each additional dollar of earnings until reaching the maximum level). This lifts even more families out of poverty. When you’re making $7, $8, or even $10 an hour, every penny counts. Workers use the money they get back from the EITC to stay afloat and pay for basic needs such as groceries and a decent place to live. And the benefits of the EITC don’t just flow to individual families. Encouraging work and putting more money in the hands of those with low incomes helps generate increased economic activity in our communities
. In 2015 alone, the EITC helped lift over 30 million Americans, including nearly 13 million children, out of poverty. In Pennsylvania, 152,000 people, including 73,000 children are not in poverty because of the EITC in 2015. A central goal of the EITC has always been to ensure that federal taxes do not push workers into poverty or deeper into poverty. But that’s not the case for low-wage workers not raising children, who are either largely or entirely excluded from the EITC. These workers also miss out on the EITC’s work incentive, and their communities miss out on the boost to economic activity that comes from more workers having enough money to spend on food and other essential goods and services.
Republican House Speaker Paul Ryan has proposed expanding the EITC to include workers not raising children. In explaining his proposal, he said, “We should make sure that in this country, it always pays to work.” Senator Sherrod Brown (D-OH) and Representative Richard Neal (D-MA) have put forward an even bolder plan. These proposals would have a dramatic impact in our state. The Ryan proposal would help 544,000 individuals in Pennsylvania become newly eligible for the EITC or eligible for a larger credit. The Brown-Neal proposal would help 659,000 workers in Pennsylvania. Among them would be tens of thousands of former members of the military, young workers aged 21-24, workers in rural areas, and Latino and African American workers.
Even more so than in previous years, we need to overcome our differences and come together after the election. An effort to help and empower low-income workers by enacting a much-needed expansion of the EITC would be a good place to start, and we hope Senators Toomey and Casey and our other members of Congress will actively support this. Thousands of working Pennsylvanians are counting on them.
Facka represents the Susquehanna Valley Progressives, a nonpartisan organization united for the betterment of the whole community.
—Written by Chip Facka and published in the Sun-Gazette December 8, 2016