When we donate to charity, we want to hear success stories, of real progress toward the organization’s mission, and how efficiently our money is spent. It’s no different with our tax dollars: if taxes are used to help the poor, we want to know that that money is spent effectively.
The Earned Income Tax Credit (EITC) is a perfect example of tax dollars well-spent, and the following example illustrates why: several years ago, my friend Emily was in her last year of college. She was living with her husband and son in a unique work-for-rent situation that allowed her to remain a full-time student. It was great for their little family and they planned to stay until she finished school and began working full-time. But life is full of surprises ... the first week in February, her husband lost his job and she found herself with less than three weeks to find a new place to live on meager funds.
Facing homelessness, Emily’s last hope was using her tax refund to help find stable housing for her family. She was able to find the local Volunteer Income Tax Assistance Program, which prepared her tax return at no charge and made sure she received the EITC as well as the Child Tax Credit.
The EITC helped Emily secure housing and she was able to stay in school. Her story is not unusual. A case study described in "Evicted," a new book by Matthew Desmond, notes that eviction rates in Milwaukee, Wisconsin drop each February because residents receive their EITC and use it to pay their overdue rent. This is aid that goes right back into the economy while helping reduce homelessness.
The EITC allows low-income workers to keep more of what they earn. Just like Emily, this yearly tax credit allows many low-income families an opportunity to catch up on bills, pay off debts and build up savings.
Last month, new U.S. Census data showed that the EITC and Child Tax Credit lifted 9.2 million people out of poverty in 2015. Here in Utah, were it not for the EITC, 67,000 more Utahns would have fallen into poverty, including 35,000 children. This would have raised Utah’s poverty rate by over 2 percent. For children, the increase would have amounted to almost 4 percent.
One in seven adults and one in five children are still living in poverty in America. There is so much more we can do. Currently, childless adults and young workers are eligible for only a minuscule EITC, if at all. As a result, these workers end up being taxed into or deeper into poverty. Speaker Paul Ryan and President Obama have proposed nearly identical plans to expand the EITC that would help 99,000 workers here in Utah. Even more robust proposals now in Congress would help 133,000 Utah workers.
Also, Utah could join 26 other states that have a state EITC, giving low-income working families an additional boost.
Emily’s EITC experience inspired her to work for the Community Action Partnership of Utah and help other families claim the EITC. Today, Emily is a professional at a local nonprofit. Talking with her you would never imagine that she once risked homelessness.
Now at election time, I ask voters to be aware of the millions of Americans still living in poverty. We have effective programs such as the EITC that can be expanded both at the federal and state level. We can do more to help hard-working Americans escape from poverty.
Debbie Baskin is a RESULTS volunteer and board vice chair of Voices for Utah Children.