By Lydia Pendley and Kathryn C. Sherlock
The working families of New Mexico and the nation are the backbone of our economic and cultural identity. Working families are so essential that our city, state and nation have created public policies and programs designed to help them to survive.
The Earned Income Tax Credit (EITC) and Child Tax Credit (CTC) are just such tools. Both programs encourage low and middle-income people to work, even when their jobs pay too little to live on. These tax-credit programs also keep millions of children out of poverty each year, building a stronger future for our next generation.
The EITC for low-income working individuals and families is a refundable federal income tax credit. It has received bipartisan support since Congress passed it in 1975. The EITC is designed to "make work pay" by decreasing the impact of taxes that low-wage workers pay on their earnings by supplementing their wages. The intention is to move a family with a full-time minimum-wage worker above the poverty line. The EITC is the largest poverty-reduction program in the U.S., and, in 2009, it was expanded as part of the American Recovery and Reinvestment Act (ARRA) to provide more help to married couples and low-income families with three or more children. In 2009, the EITC lifted 6.6 million people out of poverty, half of them children.
The CTC is designed to lessen the impact of income taxes for families raising children. Again, as part of the ARRA, the CTC was improved to allow families earning between $3,000 and $13,000 the chance to claim the credit. Previously, these working families were not allowed to claim the CTC. This change alone has helped 13 million low-income children and their families.
As a nation, we are right to invest in tax credits for working families. The EITC and CTC (and the improvements to them enacted last year) have been essential in helping families get back on their feet, especially in these tough economic times.
Beyond helping individual families, EITC dollars are helping to get our economy moving again. In 2007, across New Mexico, over 319,000 households claimed the EITC and/or the CTC, thus bringing over $470 million into New Mexico’s economy. As many of us know, the dollars received by working families go right back into New Mexico’s economy.
The 2009 improvements to the EITC and CTC are due to expire at the end of 2010. If these long-overdue changes are allowed to end, thousands of working families in New Mexico will be put in financial jeopardy. In our state, 177,000 children would receive a smaller CTC and 78,000 people would receive less EITC.
At a time when New Mexico’s economy needs positive improvement, removing these benefits to our working families makes no sense at all.
It’s time to reaffirm our commitment to real family values and make the 2009 improvements to the EITC and CTC permanent.
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Pendley and Sherlock are Co-Group Leaders of RESULTS-Santa Fe.
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Copyright (C) 2010 by the American Forum. 9/10
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