Salt Lake Tribune, August 4, 2008: Opinion: EITC: Another place the federal government can help
Karen Crompton
Salt Lake TribuneArticle Last Updated:08/04/2008 01:08:25 AM MDTA Salt Lake Tribune editorial, “The Urban West: Where the Federal Government Can Help” (Our View, July 24), examined recommendations from a new Brookings Institution report on strengthening the region’s economy through federal partnerships on transportation, climate change and immigration.
There is another important recommendation from a recent Brookings report that shouldn’t go unnoticed when it comes to strengthening our state’s economy: Expand the Earned Income Tax Credit (EITC).
The EITC, a federal tax credit that is available only to low-income people who work, has been the most effective federal program in pulling working people out of poverty. More than 22 million lower-income working families received the EITC through their federal tax refunds in 2006, claiming $43 billion. In Utah that year, 140,000 workers and families claimed $257 million.
Now, as the economy endures a rough patch, and prices for food and energy continue to rise, expanding the EITC could do a lot to help low-income workers – including those in Utah – weather the storm.
State lawmakers have a role to play here as well, but only the federal government has the scale to address the mounting challenges facing these families in nearly every corner of the nation. What’s more, research has found that the EITC stimulates local communities as tax refunds are spent and put back into the economy – an added jolt that could really help our region right now.
The way the EITC is currently structured, certain groups of people – workers without kids, married couples and families – receive disproportionately low EITC amounts. If the federal government addressed some of these limitations in the credit, Brookings estimates that families in Salt Lake City and Utah generally would be some of the biggest beneficiaries in the nation.
First, we should reduce the “marriage penalty” that faces some low-income couples who qualify for the EITC. Such a change would especially benefit Utah, which has among the highest shares of married couples among its low-income population. This expansion would help nearly 16,000 taxpayers in Salt Lake City and nearly 47,000 statewide.
Second, we should expand EITC benefits for working families with three or more children who face higher costs of living but gain no additional benefit from the EITC above what smaller families receive. This change would help almost 20,000 families in the Salt Lake City area and almost 60,000 statewide.
Third, we should significantly increase the small EITC offered to very low-income workers not raising children. These workers pay about four times as large a share of their income in federal taxes as do low-income families with children. About 24,000 Salt Lake City-area workers and 54,000 across Utah would benefit from such a change.
Put these proposals together, and Brookings estimates that the changes would deliver an estimated $42 million to nearly 54,000 workers and families in the Salt Lake City area. The $121 million that 148,000 taxpayers throughout Utah would gain translates into the fourth-largest increase in projected EITC among the 50 states.
Expanding the EITC would make a significant difference in the lives of millions of workers and families in the Salt Lake area, in Utah and across the nation. Helping our working families navigate these tough economic times is a smart recommendation that we shouldn’t overlook.
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* KAREN CROMPTON is executive director of Voices for Utah Children.