Congress’ top 2017 priority should be poverty alleviation by EITC Expansion

January 27, 2017. As part of a campaign launched earlier this fall, and in recognition of EITC Awareness Day, over 60 New York-based organizations representing hundreds of thousands of residents throughout the state sent a letter to Senator Schumer urging him to stand strong in his support for expanding the federal Earned Income Tax Credit (EITC) for working adults not raising children in the home. This expansion would help 1.1 million workers (466,000 of whom are actually taxed into – or deeper into – poverty) in New York State, and 7.5 million workers across the country.

The letter underscores the critical nature of the tax credit in helping working individuals stay out of poverty. Jennifer Jones Austin, CEO & Executive Director of the Federation of Protestant Welfare Agencies asserts that “it is imperative that we expand the Earned Income Tax Credit (EITC) to ensure that young people, workers without children and rural workers don’t get taxed deeper into poverty.” She further notes that “the proposed expansion is a common sense bill that will support more than one million New Yorkers, in addition to lifting millions of workers across the country out of poverty.”

According to Ron Deutsch, Executive Director of The Fiscal Policy Institute, “The EITC has been tremendously successful promoting work among low-wage working families with children.” In fact, 1.9 million households in our state currently receive the credit, which helps them keep more of their hard-earned wages to meet their basic needs, escape poverty, and become more self-sufficient.

The EITC, however, is either unavailable to low-wagEITC 3e workers who aren’t raising children in the home, or too small to offset their federal income and payroll taxes. “In some cases, workers whose incomes are at or just above the federal poverty level actually get taxed into, or further into poverty,” says Deutsch. “Expanding the EITC to cover young workers as well as individuals not raising children in the home is a sensible, bipartisan-supported solution to poverty alleviation throughout our state,” he contends.

Expanding the EITC for workers not raising children has champions on both sides of the aisle, including House Speaker Paul Ryan.

“We should make sure that in this country it always pays to work. I’d do that by increasing the Earned Income Tax Credit for childless workers,” said Representative Ryan. “This is a population we want to get into the workforce, and raising the EITC raises the incentives for people to work, and helps bring them into the workforce,” Ryan further stated.

Senators Schumer and Gillibrand have already signed on to legislation sponsored by Senator Sherrod Brown (D-OH) addressing EITC expansion (click here for a NYS fact sheet on the impact of EITC expansion). This bill (S. 1012) would both expand the EITC to low-wage workers not raising children between the ages of 21-24, as well as make the EITC more adequate for all low-income workers not raising children. This proposal would improve the lives of roughly 1.1 million low-wage, childless workers in New York State, including the 466,000 currently taxed into poverty, 27,000 current and former members of the military, 282,000 young workers, 309,000 Latino workers, 183,000 African-American workers, 113,000 Asian workers and 60,000 workers in rural areas.

“Thousands of young low-wage New Yorkers aged 21-24 who aren’t raising children are not eligible to receive the federal (or state) EITC, among them, thousands of youth who have aged out of foster care – more than 30% of whom experience homelessness.  These young people should be eligible for the federal EITC so they are not taxed into poverty, but instead are given a better chance to work their way into economic security,” said Kate Breslin, President & CEO, Schuyler Center for Analysis & Advocacy.

Reg Foster, President & CEO of United Way of New York State, further adds that “United Ways have a long-standing commitment to helping communities understand the value of the EITC and helping eligible wage earners access both the EITC and VITA (Volunteer Income Tax Assistance) sites.” He continues, “The EITC really helps families achieve economic self-sufficiency. Expanding it will surely help more workers who are struggling to get by.”

The campaign maintains that expanding the EITC is a real solution to very real issues in our communities because:

  • The EITC encourages and rewards work. During the 1990s, EITC expansions did more to raise employment among single mothers with children than either welfare reform or the strong economy. But the EITC fails to provide a meaningful work incentive for workers not raising children.
  • The EITC reduces poverty. The EITC already lifts 6.5 million people nationwide out of poverty each year. Expanding the EITC would give 1.1 million more working people in New York State more financial stability to cover the basics, and help as many as 16 million working people across the country.
  • The EITC boosts communities. EITC recipients can take the income they get back and spend it at local businesses in our region, paying for basics like transportation and food.
  • The EITC is an opportunity for cooperation, as it has a long history of bipartisan support. Expanding the EITC for workers not raising children has champions on both sides of the aisle, including House Speaker Paul Ryan. This is a rare opportunity for bipartisan cooperation that should be seized.
  • Governor Cuomo has also recognized and invested in the need to address poverty alleviation. Last year, Governor Cuomo introduced a $25M Empire State Poverty Reduction Initiative (ESPRI) to bring together state and local government, non-profit and business groups to design and implement coordinated solutions to decrease poverty in ten communities across upstate New York. Expanding the federal EITC is real step in the right direction to alleviate poverty in all communities throughout our state.

Deutsch further emphasizes, “The Earned Income Tax Credit is one of our best tools to reduce poverty and economic hardship. Senator Schumer has an opportunity, as a leader in this new Congress, to advance a proactive and bipartisan agenda to help boost working people by expanding the EITC.”

Friday, January 27, is EITC Awareness Day, an annual occasion to ensure that millions of low-and moderate-income workers are aware of the credit—and this year, an opportunity to raise awareness about the need to expand the EITC for workers not raising children.