Nancy Vaughan: Expanding earned income credit would be pro-work

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Sunday, April 23, 2017 | The Herald Bulletin

One of the most successful bipartisan measures to support working families has been the Earned Income Tax Credit, a refundable federal tax credit that offsets payroll and income taxes. The success of this measure is one reason United Ways have focused on providing tax assistance through and Volunteer Income Tax Assistance programs. It is also why United Ways across the country are advocating for expansion of the earned income credit to include lowerincome workers who are not raising children at home and young people struggling to get a foothold in the workforce. Last tax season, 477 Madison County returns were filed using MyFreeTaxes. com, a free filing program for households with less than $62,000 annual income. More than half of these filers completed their returns in United Way of Madison County-sponsored computer labs that provide trained volunteers for assistance. These efforts help lowerincome filers avoid tax preparation fees and ensure that they are aware of credits for which they qualify. filers in Madison County had an average refund of $1,437.73. The 139 households that used the service and claimed the earned income credit averaged a refund of $1,232.01. An additional $1,200 equates to a month’s income for a full-time minimum-wage earner. Studies show that households that get the credit use this money for necessities like food and gas — local spending that boosts the economy. However, the earned income credit currently does not extend to parents who don’t live with their children, but help pay for expenses, nor to young workers who may be paying for their own post-secondary education. Because these workers are largely excluded from the credit, they are the only group in our country that is taxed into or deeper into poverty. A study of the hardships of lower-income working people led many United Ways across the country to adopt the term Asset Limited, Income Constrained, Employed, or ALICE. The ALICE report ( documents that today, more than 19,000 Madison County households struggle financially. The county’s median household income from our recently updated report is $45,134, more than $4,000 below the state median and nearly $4,700 below Madison County’s household survival budget for a family of four with young children. Single-parent households in our county struggle more than any other category with nearly 90 percent of single female-headed households and more than 50 percent of single male-headed households at ALICE or poverty level incomes. Assisting noncustodial parents through the Earned Income Tax Credit would positively affect these children. Bipartisan proposals are pending in Congress to include workers not raising children in their homes, lower the eligibility age from 25 to 21, and increase the maximum credit. In Indiana, an additional 275,000 individuals would benefit. The EITC benefit for our families and our communities is potentially greater than any other income support. It supports work, and that leads to longterm financial stability. We have just closed the 2016 tax season and Congress is talking about tax reform. In a polarized climate, the EITC is a rare opportunity to find common ground and expand on a measure that is broadly considered to be our nation’s most effective prowork, anti-poverty tool.