Earned Income Tax Credit, Child Tax Credit can help N.C. families during COVID-19

The COVID-19 pandemic has shed harsh light on the economic inequality, low wages and decades of inadequate investment in our safety net infrastructure, which are harming North Carolina families and challenging an equitable and speedy recovery from this health and economic crisis. 

Today, on EITC Awareness Day, we highlight the importance of the Earned Income Tax Credit (EITC) to addressing the immediate challenges and systemic issues facing workers who earn low wages. The evidence is clear that tax credits for working families can do more at the federal and state level to help with family economic stability, health and well-being. 

A new report from the Annie E. Casey Foundation recommends Congress expand the popular and effective federal Earned Income Tax and Child Tax Credits to provide increased financial stability to the many families struggling to afford the basics during the protracted recovery from this public health and economic crisis.  

About 1 in 7 North Carolinians entered the COVID-19 pandemic already experiencing poverty. In 2019, 13.6% of North Carolinians lived in poverty — an income of $25,750 or less for a family of four. This means the state entered the pandemic with more than 1.4 million residents already in poverty. The pandemic has only made it more difficult for North Carolina families to afford enough food, a safe and stable home, and health care when they need it. Some 19% of North Carolina adults with children in the household reported sometimes or often not having enough to eat during the pandemic, while 18% reported having slight or no confidence in paying their rent or mortgage on time.  

Poverty rates by age reveal persistently high levels of childhood poverty. In 2019,
1 in 5 North Carolinian
 children lived in poverty. The poverty rate for children under 5 years old was the highest for any age group — at 22%. After peaking at 26% in 2012, child poverty has remained elevated in comparison to the total poverty rate, as both declined slowly.  

Combined, the EITC and CTC help lift more than 5 million children out of poverty annually in the U.S. and provide more than 6 million with additional crucial resources that make it easier for recipient families to afford necessities like housing, food, medical care, as well as safe, quality child care. However, the expansion of these programs is necessary because, due to the policies’ design,
27 million children live in families with incomes so low they do not receive the full benefit of the credit.
 

Kids whose families claim the EITC and CTC can expect to do better in school, have an increased chance of attending college, and earn more as adultsIn their report Kids, Families, and COVID-19,” the Annie E. Casey Foundation recognizes the EITC and CTC as existing tools whose expansion is a crucial element of an equitable policy response that prioritizes children and families and helps ensure children’s well-being during and after the pandemic recovery.   

Some 20% of eligible filers in North Carolina are missing out on the positive benefits of the EITC and the cash assistance the credit provides to help a family navigate the COVID-19 crisis. Unfortunately, 20% of eligible filers in North Carolina aren’t benefiting from the EITC credit because they do not claim it. In order to maximize the credit’s positive health, educatio, and economic impacts in our state, it is crucial to raise awareness among the more than 200,000 North Carolinians who are eligible but do not claim the credit, and connect them with quality, not-for-profit tax preparation like the IRS VITA program 

Heba Atwa is a Policy Advocate for the Budget & Tax Center, a project of the NC Justice Center.

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