MEDIA RELEASE: Earned Income Tax Credit must be protected as lawmakers consider changes to NC's tax code
Advocates urge lawmakers to keep, not reduce, the state EITC, a powerful anti-poverty tool
RALEIGH (February 28, 2013) — This morning, a coalition of organizations including the Budget & Tax Center and United Way of North Carolina hosted a press conference to urge lawmakers to keep the state Earned Income Tax Credit as a central part of any revenue plan and to not reduce the credit.
The Earned Income Tax Credit provides a modest but stabilizing support for taxpayers who work but earn low-incomes. Nearly 907,000 hardworking North Carolinians claimed the credit in 2011 in each of the state’s 100 counties. The credit helps boost the power of the federal EITC, which lifted 5.7 million Americans out of poverty last year – 3.1 million of whom were children.
“Now, more than ever, the EITC is critical to building a strong middle class in North Carolina,” said Jill Cox of the United Way of North Carolina. “The majority of those receiving the credit do so for short periods of time and the state credit leverages the federal credit to serve as an important anti-poverty tool.”
On Wednesday, the Senate Finance committee heard House Bill 82, which would reduce the value of the state EITC. A cut in the state EITC or its outright elimination would result in a tax shift to low-earning families. These North Carolinians work, pay taxes, and would be directly affected by the reduction or elimination of the state EITC, advocates said.
The state EITC also offers these workers a credit to offset their total state and local tax contributions, and serves to address North Carolina’s upside-down tax code, which asks from those with the least a greater share of their income in state and local taxes than from the wealthiest North Carolinians. The tax system currently asks families earning less than $50,000 a year to contribute more than 9 percent of their income in state and local taxes, versus 7 percent for individuals earning more than $800,000.
“In light of policymakers’ efforts to address the problems with the state tax code, keeping the state EITC in place is a critical first step,” said Alexandra Forter Sirota, director of the Budget & Tax Center, a project of the NC Justice Center. “The EITC is an integral piece of the tax reform puzzle.”
Karen, a North Carolinian who has received the state credit, said she wouldn’t go right out and spend it. First, she wanted to make sure how it could help support her family in the future.
“I hope that I won’t need it someday,” she said.
North Carolinians use the state EITC as a means to purchase life’s basic necessities, such as food and gas. Money is pumped back into local communities as families spend the credit on goods.
“In these tough economic times, when families are still struggling to gain a foothold in the economic recovery, the EITC supports work,” Sirota said.