NC Budget and Tax Center

Grateful for the anti-poverty power of the federal EITC

New research out the Carsey School of Public Policy at the University of New Hampshire shows the powerful anti-poverty effect of the federal Earned Income Tax Credit in states.  North Carolina, it turns out, has seen one of the greatest shares of its population benefit from this policy in the country.

A full 3 percent of the overall population would have been poor in North Carolina were it not for the federal EITC. Such a growth in poverty would have further held back the economy from reaching its full potential as working families struggle to maintain spending and make investments in their careers and families that can boost the economy.

The boost to the economy from the economy occurs in the short- and long-term.  Children in families that receive the EITC also are more likely to do better in school and have increased lifetime earnings.

Here are some of the key findings from the report for North Carolina:

  • North Carolina would see at least a six percentage point increase in its child poverty rate. Already one in four children in our state live below the official poverty line of $23,000 a year.
  • The power of the EITC is the same in metro and non-metro areas in North Carolina and the nation. It is thus an important tool in reaching rural and urban working families and not growing the different experiences of poverty and mobility by place.

The federal EITC, and the improvements that have been made over the year boosting the benefits to 523,000 North Carolinians, are critical to extend.  And with the return of a state Earned Income Tax Credit in North Carolina, the potential to minimize the harm of child poverty in our state would only grow.

For more on the federal EITC in North Carolina visit here.

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