In 1962, conservative economist and Nobel Prize winner Milton Friedman proposed a radical idea to revolutionize the way the government provided assistance to low-income families. An early advocate for addressing the “benefits cliff” (something we’re still working to fix 60 years later), he argued that the old system — which penalized those who went back to work with draconian cuts to the aid they received — kept people tied to public assistance. Instead of being able to work and gain the experience needed to provide any sort of self-sufficiency, people were caught in a cycle of receiving just enough to get by, but too little to improve their situation.
Friedman’s solution: a tax break for low-income workers and families. The earned income tax credit (EITC) was born.
It wasn’t until 30 years later, as part of a compromise between Democratic President Bill Clinton and a Republican Congress to reform welfare, that the EITC was expanded enough to begin to accomplish the goals for which it had been envisioned. For the first time, the program provided enough help that parents in low-income households could afford to go back to work, to take an entry level job — with entry level wages — and still be able to provide for their families.
And it worked! In the early ’90s, more than 1 in 4 children in the United States were living in poverty. Today, that number stands at 1 in 10. The re-envisioned EITC, which included more people and doubled the amount of aid those on the program were receiving, helped lead to one of the largest decreases in childhood poverty in our nation’s history. Annually, more than 4.6 million people, including 2.4 million children, are lifted out of poverty through the earned income tax credit and programs like it.
This aid is life-altering, allowing families to stay in their homes and children to stay in school, but it only works if people know to apply for it. Friday was the 17th annual EITC Awareness Day, so it seems like the perfect opportunity to do just that — raise awareness about the EITC. Only 77% of Salt Lake County residents who are eligible for the credit are claiming it on their tax return. That means more than 1 in 5 families who qualify for this assistance aren’t taking advantage of it. Collectively, Utahns are leaving an estimated $66 million on the table each year.
If you aren’t sure if you qualify for the earned income tax credit, or any other assistance programs, there are resources available. For the ninth year in a row, Salt Lake County will be partnering with Westminster College to host a free tax clinic for our residents, where IRS-certified VITA volunteers and staff will prepare and file both your state and federal returns at no cost to you.
It is especially important for those who aren’t required to file an annual return to reach out and see what credits may be available to them. It’s free to check, and you may be missing out on hundreds or even thousands of dollars.
The clinic is open Monday through Thursday from 4:30 p.m. to 9:30 p.m., and Saturdays from 10 a.m. to 6 p.m., at the Salt Lake County Government Center, from now until April 18. Clinic staff provide free basic, advanced, foreign student and military tax return preparation services. They will work with you to help determine if there are any special tax credits to which you may be entitled, and they partner with the Salt Lake County Treasurer and Workforce Services to provide free financial advocacy.
For appointments or more information, please call 801-210-8291 or visit WestminsterCollege.edu/TaxClinic.
Jenny Wilson is the mayor of Salt Lake County.