NC Budget and Tax Center

Expanding the EITC in North Carolina could save lives

Each year, the federal Earned Income Tax Credit (EITC) lifts millions of adults and children out of poverty. Given the  detrimental impact of poverty on health, there is significant research that demonstrates that the credit has a broad positive impact on many aspects of health. Expansion of the federal EITC, and refundable state-level EITCs have been shown to improve the health and wellbeing of working families by increasing nutritious food consumption, ensuring more babies are born at a healthy weight, improving physical and mental health, and reducing death by suicide.

While poor and low-income families with children have benefited tremendously from the EITC, childless workers, non-custodial parent workers, and older workers have been missing out on the EITC’s full potential for improving health and wellbeing. At its maximum value, the EITC is up to twelve times more generous for a worker with three or more children than it is for taxpayers without children.

A new report from the Institute for Taxation and Economic Policy (ITEP) highlights the state impact of increasing the value of the credit for workers without children. The report focuses on the impact of an age-enhancement for childless workers 18-24 who are just entering the workforce and generally have fewer assets and savings, workers 65 an older who are working well into retirement age, as well as increasing the value of the state credit to match 100 percent of the value of the federal credit; North Carolina does not currently have a state credit.

In North Carolina, an enhancement for young childless workers would impact more than 175,000 individuals, or more than 10 percent of the population of the state. An enhancement for workers 65 and older would impact about 46,000 North Carolinians.

Reinstating a generous and refundable state-level North Carolina EITC and enhancing the value of the credit for childless workers holds compelling potential to improve physical and mental health and decrease deaths by suicide in our state.

New research links receiving EITC with a decrease in premature deaths by suicide. A recent reversal in the historical trend of increased life expectancy in the United States has been attributed to deaths related to alcohol and drug abuse and suicide. These so called “deaths of despair” have been associated with the stress and despair resulting from stagnant wages, a lack of economic opportunity, and increased economic insecurity among individuals without a college degree. Recent research found that a 10 percent increase in EITC reduces death by suicide among adults with a high school education or less by 5.5 percent, with more pronounced effects for those populations with higher rates of EITC receipt. The impact of EITC on reducing deaths by suicide is even more significant for women, who tend to be more likely to be eligible for EITC. Specifically, the study found that a 10 percent increase in state EITC credits leads to a 7.4 percent reduction in suicide deaths among women.

Reinstatement of the North Carolina EITC, along with expansions for childless workers, has the potential to help reduce extreme financial-related stress and save lives in North Carolina.

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