Prosperity Watch Issue 39, No. 1: No Fireworks in Sight for Military Families Who Filed NC Earned Income Tax Credit For Last Time This Year

Independence Day is a time for Americans to come together and celebrate the importance of community, country, and military families and veterans. Military families provide us all security, but far too often, economic security escapes them. Due to lawmakers’ decision to axe the North Carolina Earned Income Tax Credit (EITC) last year, nearly 1 million families—including 64,000 military families—now have one less tool to help them make ends meet and avoid raising their children in poverty.

The North Carolina EITC went to individuals and families who worked but were paid low wages. The credit helped these families to keep more of what they earned, allowing them to support their children, get a foothold in the labor market, and avoid public assistance. Additionally, this tax credit built on the successes of the federal EITC. A substantial body of research over the last fifteen years shows that the federal credit promotes work and fights poverty.  It brings many more workers into the labor force and helps keep them on the job, by allowing them to afford things like child care and transportation.

In short, the EITC is an important and proven tool that boosts earnings and economic security—both of which are desperately needed by many Tarheel workers in a state economy that is producing mostly low-wage jobs. Nearly 1.2 million children will feel the loss of the tax credit, as will communities who stand to lose $108 million that supported local economies.

Tax policies like the NC EITC help guard military families and veterans from falling into poverty, or in some cases, reduce the severity of poverty they face. This is especially important for enlisted workers who leave the armed services and rejoin the civilian workforce where they’re more likely to experience a significant drop in earnings. The tax credits can also increase opportunity for children in military families too. Research shows that children whose families receive more income support from the EITC often perform better in school and are more likely to attend college and to earn more as adults.

Lawmakers not only failed to keep the state EITC last year, they also enacted major income tax cuts that primarily benefit the wealthy and profitable corporations. By time the Fourth of July holiday arrives, 64,000 military families will have claimed the EITC for the last time, while tax cuts that primarily benefit the wealthy and profitable corporations will simultaneously drain the resources to support a stronger local economy and supports for military families and veterans. As a result, many low-income families—despite working hard in a broken economy—can expect fewer dollars in their pockets to help them make ends meet and avoid raising their children in poverty.

Note: The author is the granddaughter of a Purple Heart Recipient and sister of a Marine veteran.

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