The federal Earned Income Tax Credit, or EITC for short, is widely viewed as a triumph of sound public policy. Available to Americans since 1975 and expanded by presidents from both parties, the EITC provides an extra boost to families of modest means who are trying to work their way to the middle class. Many states build on the time-tested model with a targeted state credit of their own, but Georgia fails to capitalize on that opportunity. National Earned Income Tax Credit Awareness Day is today and Georgia lawmakers can mark the occasion by taking a close look at changing course.
The full case for how a state EITC could strengthen Georgia families, expand the state’s middle class and boost small businesses and local economies is detailed on GBPI’s new website www.georgiaworkcredit.com, launched today. Here are some of the key benefits of the EITC explained on the site:
- More than a million Georgia families claimed the EITC in 2013, equaling 28 percent of all the state’s households. An estimated 1.2 million children, 770,000 working moms and 410,000 working dads live in Georgia households that got the benefit that year. In effect, the credit cuts taxes from the bottom-up by offsetting some or all of these families’ federal tax bills and delivering a refund at the end of the year. Of the nearly 1.1 million Georgia households that benefit, about 80,000 are military families.
- Families striving to reach the middle class get a powerful boost from the EITC. Nearly 250,000 Georgians, more than half of them children, would have fallen below the poverty line in 2013 if not for the extra money the tax credit provided. The credit is only available to people who work, and for workers with very low wages it increases in value with each dollar earned. That encourages low-income families to enter the job market and work more hours and rely less on public assistance.
- Communities all of stripes benefit from the EITC and could get a big benefit from a state version. About a quarter of Georgians who live in the state’s most urban place, Fulton County, claimed the credit in 2013. But so did 40 percent of people in Colquitt County and 45 percent of people in Clinch County, two very rural south Georgia locales. In 154 out of 159 Georgia counties, at least one in five households receives the credit. Recipients of the credit often spend money in local shops and restaurants, bolstering small businesses and strengthening local economies. You can explore how your community benefits from the policy with this interactive map.
How can Georgia lawmakers build on the EITC’s widespread success? Twenty-six states and the District of Columbia provide a modest yet crucial state version of the credit for families who already receive the federal benefit. Georgia is missing out on that golden opportunity.
If state lawmakers reverse course, they could provide a bottom-up tax cut to more than a million Georgia families, help workers in low-wage jobs reach the middle class and pump needed new dollars into Georgia’s local communities. Specific details about ways Georgia lawmakers might structure a new credit are detailed in the GBPI report “A Bottom-Up Tax Cut to Build Georgia’s Middle Class.”
State EITCs are an affordable, targeted reform that delivers an impressive bang for the buck. For families who benefit, the extra money can mean the difference between reaching self-sufficiency and backsliding into poverty.
Imagine a young mom earning minimum wage as a cashier, who uses her EITC for a first- and last-month’s rent to move to a better neighborhood, with decent access to quality child care and schools. Or a young dad who mans a construction site by day but occasionally shows up late because he can’t afford reliable transportation. His EITC refund allows him to clear away a little debt and finally get that reliable car to get to work, which helps him become both a better father and a better worker.
The potential benefits of a Georgia EITC are clear, so the next step is making one happen. With a successful track record, support from members of both political parties and an economic benefit that would touch every community in this state, the time is now to add to the federal credit’s success story and bring a state EITC to Georgia. Please visit www.georgiaworkcredit.com to learn more about how you can help.