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Demise of state EITC will harm 64,000 NC military families

New from the numbers wonks at the Budget and Tax Center:

Allowing the state Earned Income Tax Credit to expire would harm veterans, active-duty military, a new analysis finds

RALEIGH (July 2, 2013) – About 64,000 veteran and active-duty military families in North Carolina would be impacted by current tax plans, all of which allow the state’s Earned Income Tax Credit to expire. New analysis by the Washington, D.C.-based Center on Budget and Policy Priorities and state-level analysis by the Budget & Tax Center found that tens of thousands of military families in North Carolina would be affected.

The Senate tax plan (HB 998, Fifth edition) being debated later today allows the state Earned Income Tax Credit (EITC) to expire, increasing the tax load on tens of thousands of low-income soldiers, veterans, and their families while the wealthiest taxpayers and profitable corporations get a tax break.

“Our troops and veterans have made incredible sacrifices to help keep us safe and it’s our fundamental duty to make sure they can provide for their families,” said Alexandra Sirota, Director at the Budget & Tax Center. “Unfortunately, the current tax plans under consideration fail in this most basic duty.”

As the Center on Budget report reveals, more than 78,000 military families in North Carolina benefit from federal tax credits for working poor families, including both the EITC and the Child Tax Credit. Out of this group, 63,597 military families receive the federal EITC.  Since the state credit is based on eligibility for the federal credit, this is the same number of military families that also receive the state EITC.

“The state’s EITC is also an important anti-poverty tool that helps military families make ends meet,” said Allan Freyer, policy analyst at the Budget & Tax Center. “If the EITC is allowed to expire, these families will see their taxes increase by as much as $272 a year—enough to pay rent or buy groceries for a month. Losing this critical wage supports could push these families and their children into poverty.” 

Nationally, roughly 1.5 million military families, which include about 3 million children under age 18, received one or both of the credits.  The credits make a major difference to their economic security: 

  • The EITC and CTC together keep more than 140,000 military families — with nearly 300,000 children and 600,000 total family members — from falling below the poverty line, based on the federal government’s Supplemental Poverty Measure, which counts income from tax credits. These credits reduce the severity of poverty for about another 800,000 members of military families.
  • The tax credits can also increase opportunity for children in military families.  Recent academic research demonstrates that EITC receipt is linked to improved performance (including better test scores) by children in school — and to increased employment and earnings when the children reach adulthood. 

The Center on Budget and Policy Priorities’ full report, Working-Family Tax Credits Help Over One Million Military Families can be found by clicking here

The BTC analysis on the state EITC and military families can be found by clicking here.

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