Expand the EITC, Expand Workers’ Livelihoods

By Yuqi Wang, Economic Policy Analyst, NCLR

The latest Census data on income and poverty is proof that hardworking Americans and targeted policy interventions can create profound economic change. In 2015, there were 3.5 million fewer Americans living in poverty. The Latino community, in particular, saw immense improvements in health and economic stability, including a rise in household income from $42,491 in 2014 to $45,148 in 2015.

One program that lifted 27.5 million working families above the poverty line in a single year is the Earned Income Tax Credit (EITC). It fights poverty by decreasing low- and moderate-income workers’ federal taxes and provides a refund when workers’ tax obligations fall below $0. The EITC is a critical infusion of cash for many hardworking families, helping them pay rent, put food on the table, and pay down debt.

Millions of working-class people are still struggling, and did not share in the gains the Census Bureau reported. About 13.5 percent or 43 million Americans, including 12.1 million Latinos, lived below the poverty line in 2015. To sustain and grow the economic improvements we saw in 2015, we must expand the EITC to workers not raising children. More than seven million workers not raising children are taxed into—or deeper into—poverty each year.

NCLR’s latest fact sheet, Expand the EITC, Expand Workers’ Livelihoods, released today, describes the workers who would benefit from EITC expansion include:

• Full-time workers making up to $9.62 an hour.
• Recent college graduates working in low-paying occupations who are living paycheck-to-paycheck and have trouble paying for rent, groceries, and education expenses.
• Parents who don’t live with their children, but help pay for child expenses.

EITC expansion would also help six million workers in the services and sales industry who are not raising children; Latinos comprise almost 40 percent of the workforce in these two industries. The average hourly wage for workers in either industry is $8, which is not nearly enough income to cover monthly housing, food, and other household expenses. Yet, because of the EITC’s outdated eligibility requirements, these workers cannot claim the credit because they make over a certain income threshold. In other words, if a 22-year old Latina server works 40 hours a week and earns minimum wage (about $13,900 a year), then she makes too much to qualify for EITC. For the small number of workers who do qualify, they receive a credit that is only seven cents to every dollar of income they bring in.

The EITC has always had bipartisan support, and there are current proposals from both sides of the aisle to expand the credit to workers not raising children. Yet, there is a lot to do before that can be a reality. There will be opportunities to push for EITC expansion that can continue the trends we saw in 2015, but they will require the collective voices of advocates, community members, and legislative leaders to move forward.

Raise your voice, and let your senators and representatives know why expanding the EITC is important. Collectively, we can and will continue to advance policies that will expand the livelihoods of hardworking Americans for decades to come.