Why saving tax credits is so important to working families
By Stephanie Román, Economy Policy Analyst, NCLR
How often do you think about tax credits outside of the day you prepare your taxes or get your tax refund?
It’s true that a lot of us don’t think about tax credits often, but we should be thinking about them now because they might disappear if we don’t act to save critical improvements.
During the recession, lots of families were struggling, so both parties in Congress agreed to help working families by expanding the Earned Income Tax Credit (EITC) and Child Tax Credit (CTC) so even very low-income working families could get a partial credit. These tax credits help families with the cost of raising children and reward families who don’t earn very much. If these credits are worth more than what someone owes in taxes, they can receive the difference as a tax refund.
I was recently in Miami at the South Florida Hispanic Chamber of Commerce’s event Viva Miami to talk to real people about why they might lose part or all of their CTC and EITC refund. I didn’t expect people to be interested in this topic, but they proved me wrong. These families were interested in talking about these tax credits because they make a real difference in their lives. While there, I met Karen, a single mother of three. Karen told me it would be extremely harmful to her family if the improvements to the CTC expire. She works hard to support her kids yet is still living paycheck to paycheck. Though the recession has officially ended, research shows that many working families like Karen’s are not earning enough to cover their basic expenses. Latinos are hit especially hard—more than 40 percent bring home poverty-level wages despite their huge contributions to the U.S. economy. The CTC refund averages $1,000 and helps families fill the gap and provide funds that can be used for savings, to make a needed purchase, or go toward rent and mortgage payments.
The Mayor of Miami, Tomás Regalado, who also participated in this event, is another person who believes in the effectiveness of the CTC and EITC. He spoke compellingly about how he’s seen the tax credits work in Miami. To him as to many others, “saving the credits is an important and human issue.” With so many working families struggling to get by in a tough economic recovery, it just doesn’t make much sense for Congress to allow these vital enhancements of the EITC and CTC expire. As I learned from talking to families in Miami, the stakes are high. If these critical tax credits expire, Latinos would be especially harmed because they make up a disproportionate share of low-wage workers who qualify for the EITC and CTC. In 2013, Latinos made up 17 percent of the U.S. population but 28 percent of the working poor.
This fall, as Congress considers renewing some business tax credits that are expiring, it should not forget about the millions of families like Karen’s who depend on these pro-work tax credits. If Congress doesn’t act to save these credits, five million Latino families will lose an average of $1,000 each and 50 million Americans, including 25 million children, will lose part or all of their EITC or CTC. These tax credits make a difference in the lives of millions and we have to make sure Congress does the right thing for hardworking families struggling to get by.