Commentary: Earned Income Tax Credits: helping low-income families build lives and assets

The impact of the EITC and other refundable tax credits can be enormous for low- to moderate-income working families. They use these tax benefits to lift themselves out of poverty, provide for their children and begin to develop financial assets. From a policy design standpoint, the EITC offers both...

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Veröffentlicht in:Fedgazette 2004-03, Vol.16 (2), p.20
1. Verfasser: Haney, Beth
Format: Artikel
Sprache:eng
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Zusammenfassung:The impact of the EITC and other refundable tax credits can be enormous for low- to moderate-income working families. They use these tax benefits to lift themselves out of poverty, provide for their children and begin to develop financial assets. From a policy design standpoint, the EITC offers both relative simplicity and efficacy, particularly compared with other anti-poverty efforts: Low-income workers - and workers only - get a sizable, supplemental check come tax time. The sum of the EITC and Minnesota's WFC can potentially add almost 50 percent of income to a family's earnings. For example, a single parent of two earning minimum wage working full time in 2003 earned only $10,712 but is eligible for $5,256 from just the EITC and WFC. The average combined refund for working Minnesotans from these tax credits was $2,000 in 2003. The importance of the EITC as a local economic development tool should also not be underappreciated. Last year, Minnesotans claimed more than $310 million in federal funds.
ISSN:1045-3334