Gary Zuckett: Should federal EITC reward work permanently?

By By Gary Zuckett

There has been coverage in the media lately on the activities of the new coalition promoting the creation of a state EITC (Earned Income Tax Credit) but not as much attention to the federal EITC and Child Tax Credits (CTC), major portions of which are set to expire in 2017 unless Congress acts to save them.

The Economic Policy Institute says the federal Earned Income Tax Credit was first proposed in the early 1970s, and was finally signed into law by President Ford. It was later substantially expanded by President Reagan, who deemed it “the best anti-poverty, the best pro-family, the best job creation measure to come out of Congress.”

Next to Social Security, the federal EITC and the Child Tax Credit make up the nation’s most powerful anti-poverty program. In 2012, they lifted 10.1 million people in low-income families out of poverty, including 5.3 million children according to the West Virginia Center on Budget & Policy.

The Center also points out that same year, 160,000 West Virginia households received the EITC and 95,000 received the low-income part of the CTC. The EITC put about $341 million back into West Virginia’s economy, while helping low-income working families make ends meet.

The EITC is a hand up, not a hand out. It rewards work with a refundable tax credit that many use as a down payment on a more reliable vehicle to get to work, pay off credit cards, make home improvements, replace worn out appliances, you name it. These checks are immediately spent into local economies which keeps keep them more robust and productive.

However, there is much concern that, in the slash and burn mentality that seems to prevail at this point in Washington, these powerful anti-poverty programs may come under attack.

At the same time there is a movement among family advocates nationwide to press for making these beneficial tax credits a permanent part of our national policy. They point out that every year Congress renews scores of tax breaks for big business (nicknamed ‘tax extenders’) and now there is movement to make many of these annual tax cuts permanent. All this is proposed without applying the “payfor” (as in what shall we cut to “pay for” this) yardstick that is always applied to policies targeting children and families struggling to make ends meet.

Family advocates argue that, if Congress is indeed wading into another round of approvals for business “tax extenders” that they should, at the same time, move to make the EITC and CTC a permanent part of our tax code. I concur. These bi-partisan policies have proven their worth, and now is the time to make them a permanent fixture.

Business is always arguing for the “certainty” they need in federal rules and taxes in order to plan for future expansion and make business plans. Certainty is also needed by low-income working families that the regular “hand up” of the Earned Income Tax Credit and Child Tax Credit will be there for them to plan for making ends meet.

Our congressional delegation should monitor closely for any attempts to undo both the EITC and CTC. Their support for making them permanent would give greater economic certainty to the 160,000 working West Virginia families who annually make good use of this bootstrap policy.

Gary Zuckett is executive director of the West Virginia Citizen Action Group.

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