By Clarence Hightower, Ph.D.
The Anti-Poverty Soldier
The Earned Income Tax Credit is one of the most successful anti-poverty tools in the United States
– The Foundation of the Mid-South
These dollars (EITC) are too important to our families to send them back to Washington, D.C. This tax credit is real money for people who really need it.
– Maria Shriver
The (EITC) increases labor force participation, reduces poverty, improves maternal and child health outcomes, and strengthens children’s educational outcomes.
– Dwyer Gunn
This past October, both the Star Tribune and the Paul Pioneer Press featured front page stories about Mayor Melvin Carter’s proposal to create an Office of Financial Empowerment in the City of Saint Paul.
Some of the current challenges cited by City Hall include the fact that St. Paul’s poverty rate is 70 percent higher than Minnesota’s overall poverty rate. The home ownership rate in St. Paul is below 50 percent as compared to a rate of 70.9 percent state wide and more than one-quarter of St. Paul renters are classified as “extremely cost- burdened” (meaning they spend more than 50 percent of their income on housing). Finally, the “effective buying income” of St. Paul’s residents remains significantly lower than the national average.
Each piece in the two local dailies makes reference to other cities such as Detroit, Boston, St. Louis, and Nashville where plans similar to the one in St. Paul have already been initiated. And, among the most common strategies in those cities is to link residents to free tax preparation services and encourage eligible households to claim the Earned Income Tax Credit (EITC).
Established in 1975, the EITC is a federal benefit that can significantly lower the tax burden of low-income households often resulting in substantial refunds. In fact, the United States Census Bureau notes that the average annual refund to a family with children that claims the EITC is almost $3,000. Furthermore, statistics reveal that millions of American families are lifted out of poverty each year by simply claiming the EITC.
The EITC has been so beneficial to so many Americans that there are an increasing number of proposals from policy experts, elected officials, and consumer advocates to boost its impact, not only by increasing the benefits to low-income families but also by expanding the eligibility guidelines to include more households.
In addition, as new research suggests, the potential of the EITC on low-income families
might well extend beyond mere financial benefits.
Long-term studies by the American Economic Journal, Northwestern University, and the University of Notre Dame indicate that both children and adults that benefit from the
EITC have improved health outcomes.
In my view, the benefits of the EITC cannot be understated. Since 2015, the agency I lead (Community Action Partnership of Ramsey & Washington Counties) has helped return well over $800,000 in tax refunds to local residents. And we are far from alone as there are Volunteer Income Tax Assistance (VITA) clinics that operate throughout the metro providing free tax services and guiding eligible households toward the benefits of the EITC.
That said the City of Saint Paul’s push to increase the number of residents that access the EITC in addition to other tax rebates and financial empowerment tools is critical. Every year millions of dollars go unclaimed as EITC eligible households fail to take advantage of this benefit, either because they are unaware of it, unsure as to whether or not they qualify, or just don’t know how to apply.
If you live in the metro area and believe that your household or someone you know might qualify for free tax services and the EITC, please visit www.prepareandprosper.org. For those living outside the metro area, you can learn more by visiting www.youclaimit.org.
Clarence Hightower is the Executive Director of Community Action Partnership of Ramsey & Washington Counties. Dr. Hightower holds a Ph.D. in urban higher education from Jackson State University. He welcomes reader responses to 450 Syndicate Street North, St. Paul, 55104