A majority of the families that benefit from the Earned Income Tax Credit (EITC) are single head of household filers— a filing designation commonly used by single mothers. The same single mothers who are struggling to provide the basics of a healthy and happy life for their children in an economic climate defined by stagnating wages and higher costs for childcare, medicine, and housing. North Carolina’s low- and middle-income working families are struggling to stay afloat as costs rise faster than their pay.
In North Carolina, these same families are responsible for an ever increasing tax burden while our state’s wealthiest individuals and corporations are not being asked to pay their share.
In stark contrast to the Tax Cuts and Jobs Act (TCJA) of 2017 that was heavily tilted in favor of corporations and the wealthy, several Senate co-sponsors just introduced the Working Families Tax Relief Act.
If successful, the Working Families Tax Relief Act will strengthen the highly effective EITC and Child Tax Credit (CTC).
Families with children would see an increase in their EITC of about 25 percent. In addition, in an effort to offset the negative impact of unforeseen expenses, the act would allow recipients to access part of their EITC starting midway through the tax year. For the first time, the EITC would be expanded to extend eligibility to low-wage workers without dependent children — a group currently taxed into poverty.
The act also includes an expansion of the Child Tax Credit in the form of a reversal of restrictions on the refundable portion of the CTC imposed by the TCJA, and adds $1,000 per child increase to the credit for those families with children under 6.
The Working Families Tax Relief Act would benefit more than 3,745,000 North Carolinians, making 1,543,000 N.C. families more financially secure, including 1,592,000 children, according to estimates from the Center on Budget and Policy Priorities.
For working families, this would mean more money for basic necessities, like home repairs and expenses associated with continuing to work like maintaining a car to get to work or, in some cases, additional education or training to get a better, higher-paying job.
Experiencing poverty in childhood has implications for an individual’s entire life, and may mean a continuation of the cycle of poverty for the next generation. Tax credits for working families improve children’s chances of breaking out of the cycle, as beneficiaries do better in school, are likelier to attend college, and are likely to earn more as adults. That’s important not only for the children themselves, but for our country and economy.