The tax code is one of the largest tools that the federal, state, and municipal governments have to provide families with economic security and wealth-building opportunities. Yet the tax code systematically disadvantages women, people of color, immigrants and low-income families.
For the past three years, the EITC Funders Network, together with partner organizations, has actively engaged our members in conversations – through webinars, in-person meetings, and discussion groups – on the role of tax policy in advancing racial and gender equity. We’ve also been fortunate to connect with leaders in the field to create a short video series that explores the way the tax code helps perpetuate inequities and could be structured as tool to work toward racial and gender equity.
Researchers are finding that the EITC provides benefits across the life cycle and into the next generation, including a powerful effect on health outcomes. As funders increasingly look to a broad framework that defines the health of communities through social, economic, and environmental factors, this growing body of research provides an opportunity for cross-sector collaborations to advance public policies that promote economic opportunity and health equity.
The EITC Funders Network, with our partners and sister affinity groups, has started exploring this space – through webinars and in-person meetings – as an opportunity for collaboration. We have also created a resource page with links to research, advocacy reports, and funder perspectives on the intersection of tax credits and health outcomes.
The EITC was established in 1975 as the nation’s most significant policy reform to reduce poverty and incentivize work for low income Americans. Current EITC-related policy efforts aim to maintain and expand the EITC so that it continues to benefit working families.
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Increasing awareness about and access to the EITC is critical to ensuring all eligible households benefit from the EITC. Supporting free tax preparation—often in conjunction with VITA–is a core strategy of many funders to both increase access to the EITC and reduce the negative impact of high tax-preparation fees and refund anticipation loans.
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Last Spring, Propublica reported that the IRS audits low-income taxpayers at approximately the same rate as it audits the wealthiest 1 percent of taxpayers. A follow-up article notes that the agency cites inadequate funding as the barrier to enacting changes. According to the article, steady cuts have left the IRS’ current enforcement budget 25 percent…
Last week, following the House’s passage of the legislation in April, the Senate passed the Taxpayer First Act of 2019, which includes language to permanently authorize the VITA (Volunteer Income Tax Assistance) program and to allow up to $30 million in funding. After 50 years in practice, VITA will be codified, offering providers and the…
A December article from ProPublica takes a closer look at IRS audit rates by income. While higher-income taxpayers are still more likely to be audited, under pressure from Congress, the IRS has kept the audit rate of EITC recipients relatively high due to concerns about overpayment. The consistent budget cuts at the IRS, reports ProPublica,…
When asked how tax filers at Georgia VITA sites planned to use the EITC or had used the credit in years past, four out of five respondents talked about using the credit for basic necessities, such as paying for food and household bills. And almost half of respondents discussed making investments in future economic mobility,…
It’s tax season and many households are waiting on their tax refund to pay down debt or for spending on necessities. A recent report from the JPMorgan Chase Institute investigates how tax refunds, as a specific cash infusion, impact the timing of out-of-pocket healthcare spending. Drawing on the JPMC Institute Healthcare Out-of-Pocket Spending Panel data set,…
The Common Cents Lab within the Center for Advanced Hindsight at Duke University has released a new guide for VITA practitioners aimed at improving VITA-related outcomes by recommending interventions based on behavioral science. The Lab, which studies financial decision making, designed the guide to build on existing best practices. It outlines a series of solutions…
The Tax Policy Center’s new report on income volatility finds that the majority of working age adults live in households in which income during at least one month per year will fluctuate significantly (at least 25 percent above or below average monthly income). The percentage of low-income, working-age adults who experience this fluctuation is especially high…
The State of California’s Franchise Tax Board (FTB) recently released a report on the impact of the state’s earned income tax credit (CalEITC). Using data from Tax Year 2015, the FTB found that the CalEITC benefitted approximately 815,000 Californians and together with the federal credit, helped lift approximately 250,000 Californians out of deep poverty. The report…
A recent Tax Policy Center blog post takes a look at early tax filing data from the IRS, which show that fewer tax returns were filed early on in the tax season this year and that average refunds have dropped. As of February 3rd, only 20 million returns were filed in contrast to 27 million the previous…
EITC Awareness Day is coming up on January 27th. Below are some resources to help get the word out: The Taxpayer Opportunity Network and CFED have crafted ways to spread the word about the EITC in 5, 10 and 30 minutes. The EITC Awareness Day Toolkit also includes state-by-state data snapshots and sample social media posts in…
The Tax Policy Center has released a report on the impact of the EITC refund delay mandated by the PATH Act (the Act requires the IRS to delay refunds for tax filers who claim the EITC or additional child tax credit until at least February 15). Using IRS data, a survey of low-income tax filers,…
At the end of last year, Congress passed a tax package that made made a number of vital tax credit provisions permanent, including improvements to the EITC and the Child Tax Credit (CTC). The legislation also created new requirements for immigrants who file their taxes with an Individual Taxpayer Identification Number (ITIN) for income earned in…
The EITC refund offers a significant boost in income to many working families. Funders have been using these boosts as “teachable moments” – introducing low- and moderate-income families to banking, credit clean up, financial planning and family budgeting. In addition, the EITC can also help families save. New savings opportunities – including savings bonds and Individual Development Accounts—have been specifically designed to help families take advantage of the boost in cash during tax time and promote good financial planning and savings behaviors.
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The EITC is just one benefit available to low- and moderate-income families. While the EITC enjoys high participation rates, far too many struggling families do not access the other benefits and supports available to them – subsidized child care, food assistance, energy assistance, health care and dental screenings, etc. Funders have been exploring ways to ”bundle” these benefits – that is, streamlining policy and program efforts aimed at making applying for one a doorway to applying for many kinds of benefits and supports.
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Improving Access to Public Benefits