By Jeanie Smith American Forum
March 26, 2014
It is tax time again, and I’ve been hearing a lot about the possibility of a State Earned Income Tax Credit — a tax credit for working families that would piggybacks off the federal EITC. Over the last two years, I’ve seen more and more support for a state EITC, and finally, legislators are considering instituting one for Kentucky.
I think they should. The past two years my husband has been in school. We have two small boys, and we qualified for the federal Earned Income Tax Credit, which means that we’d also have qualified for a state EITC. The largest credits go to families with incomes between about $10,000 and $23,000, then the credit gradually tapers off at about $38,000 to $52,000, depending on family size.
As the one who buys the groceries for this family, and keeps the growing feet in shoes, I know that we could have put that tax credit to good use. We could have used it toward the textbooks for my husband, or to take the stress out of a month’s bills. Being able to repair a car that can get your kids to school and you to work, fixing a leaky faucet that has been costing you on every bill, buying fresh produce at the end of the month when your cupboards would otherwise be bare. These things make you feel like you can keep going, and these are the kind of expenses that a state EITC would help offset.
I live in Warren County, where according to the Kentucky Center for Economic Policy, a state EITC would directly benefit more than 10,000 Warren County families, with an average credit of $330. Our families, like families all over Kentucky, are working hard to make it today. Having a $300-$400 tax credit that targets low- to moderate income working families would make such a difference in the day-to-day. This credit would come at a particularly challenging time of year, when heating costs are the highest, and when most winter seasonal jobs have ended and summer jobs have yet to begin.
But an EITC is not a temporary fix. Studies show that it helps families get on a better track with benefits that carry over from generation to generation. The EITC is associated with healthier babies, improved educational outcomes for children, and higher rates of employment and earnings later in life.
Research has found an association between state EITCs and improvements in birth weight and fewer premature births—areas where Kentucky children are especially at risk, compared with the rest of the nation. Studies have found that raising family income through refundable tax credits makes it more likely that children in a family will attend college—an effort that everyone in Kentucky should get behind. And according to a recent Stanford study, adding $3,000 a year in EITC income to children in working-poor families before age six increases those kids’ annual earnings as adults between ages 25 and 37 by 17 percent. These percentages are families who have gotten on a better track, and whose children are starting out on a better track, thanks to smart economic policy.
And now, it’s Kentucky’s turn. The time is now to pass the EITC, and it would be smart of legislators to pass it along with an increase in the minimum wage, and as part of a comprehensive tax reform package that raises the revenue to pay for it. It’s a good investment.
More than 410,000 Kentucky families would qualify for a state EITC. I don’t know that my family will be one of them next year. My husband is through school, employed as an RN, and now we’re more financially secure. The federal EITC helped us get through the rough patches, and I know that the last several years would have been more manageable with an additional state credit to help us meet basic expenses. I hope that our legislators seize this opportunity to do right by Kentucky families like mine.
I am contacting my representatives and letting them know that I want them to join me in supporting a robust Earned Income Tax Credit. I urge you to contact them as well—it is easy and they need to know that we support this. You can call the Legislative Message Line at 1-800-372-7181 and urge your legislator to stand with you in supporting a robust Earned Income Tax Credit. Economic security strengthens families, and when our families are stronger, our commonwealth is stronger.
Jeanie Smith is a mother of two living in Bowling Green. She organizes support for affordable local food options and economic policies that improve the quality of life for all Kentucky.