State-level tax credits could help N.C. reduce child poverty

In North Carolina, 43 percent of children of all races live in poor or low-income homes. Respectively, 64 percent of N.C.’s Black and Hispanic/Latinx children live in poor or low-income households. Experiencing poverty during childhood has lifelong implications for a person’s physical and mental health, exposure to violence, educational attainment, and future financial security. Tax credits for working families, like the Child Tax Credit, are known to improve a child’s immediate and long-term well-being and access to opportunity.

Expanding state-level Child Tax Credits has the potential to reduce child poverty in North Carolina by 44 percent, while reducing deep child poverty in our state by 56 percent. That is equivalent to lifting 138,000 North Carolina children out of poverty, and 58,000 children out of deep poverty.

Unfortunately, the Child Tax Credit does not currently reach about one-third of the families and children at the federal level despite recent changes to the federal Child Tax Credit under the Tax Cuts and Job Act because they are part of households that earn too little to claim the full credit.

A new report from the Institute on Taxation and Economic Policy finds that states can both decrease childhood poverty and repair tax code inequities by filling in gaps left by the federal credit. In many states, including North Carolina, the poor and low-income residents pay a larger share of their income toward taxes than the state’s wealthiest residents.

North Carolina’s child tax credit was repealed and replaced with a deduction.  As the Department of Revenue reports, this change “expands the number of taxpayers who may benefit from the State tax deduction by increasing the federal adjusted gross income (“AGI”) limit for each filing status. It also provides five deduction amounts, as opposed to the previous two credit amounts.”  The impact of this change was to make the tax benefit available to higher-income taxpayers, but it didn’t necessarily increase the value of that tax benefit for all who claim it, particularly for middle-income taxpayers.

In order to maximize the significant documented benefit of the Child Tax Credit while helping to address the inequities of our state tax code, North Carolina could create a state level credit that would enhance the federal credit up to key thresholds for households and ensure that families — regardless of their income tax liability — are provided with a boost to provide for their children’s healthy development.

Top Stories from NCPW

  • News
  • Commentary

WASHINGTON — The coronavirus pandemic has brought heartbreaking consequences for millions of U.S. ch [...]

Sheriffs and advocates remain opposed, but the party of Donald Trump is no longer a roadblock Video [...]

Student leaders at UNC-Chapel Hill are asking that money from a recently increased security fee go t [...]

The murder of George Floyd in Minneapolis in May of 2020 and the demonstrations that ensued in score [...]

An honest assessment of the disastrous U.S. experience in Afghanistan leads to some hard truths and [...]

There is, of course, nothing new about the idea that blood runs thick in politics. The list of promi [...]

The post North Carolina court blocks Voter ID law for discriminatory intent appeared first on NC Pol [...]

Vaccine refusal is a major reason COVID-19 infections continue to surge in the U.S. Safe and effecti [...]

A Clear and Present Danger

 

NC’s Tarheel Army Missile Plant is a toxic disgrace
Read the two-part story about the Army’s failure to clean up hazardous chemicals, which have contaminated a Black and Hispanic neighborhood for 30 years.

Read in English.


Haga clic aquí para leer: Peligro inminente
Una antigua planta de misiles del Ejército ha contaminado un vecindario negro y latino durante 30 años.

Leer en español.