We, the undersigned members of the Taxpayer Opportunity Network, a coalition of organizations providing free tax assistance to low- and moderate-income Americans, urge Congress to act this year to save vital provisions of the Earned Income Tax Credit (EITC) and Child Tax Credit (CTC) and to plug the gap in the EITC for childless workers.
The Taxpayer Opportunity Network, sponsored by the Corporation for Enterprise Development (CFED), brings together more than 550 members representing 300 organizations that provide tax assistance in low-income communities at little or no cost to taxpayers. Quality tax services help Americans secure important tax benefits, reduce debt, and meet their civic obligations as taxpayers, setting them on the path to financial security. Last year alone, volunteers filed more than 3.2 million federal returns helping taxpayer claim $1.1 billion in EITC benefits.
As tax practitioners in low-income communities throughout the country, we know how important the EITC and CTC are for low-wage American workers. In 2013, the EITC and CTC were responsible for lifting more than 6.5 million people out of poverty, including 3.2 million children. Research also shows that the lump sum tax refund provides a rare opportunity for low-wage workers to plan for their financial future. These workers use their tax refunds primarily for debt management, savings, and investments. In short, the EITC and CTC don’t just help low-wage workers get by; these programs help them get ahead.
If Congress fails to save essential provisions of these credits before they expire, 50 million Americans, including 25 million children, will lose part or all of their tax credits. This means real hardship for real workers. A single mother with two children who works full time at the minimum wage, earning $14,500, will lose her entire CTC of $1,725. A married couple with three children and earnings of $35,000 will lose $1,200 from their EITC. Congress should act this year to ensure that these working families do not lose out.
But it’s not just working families that stand to lose if Congress fails to act. The existing EITC does little to support low-wage childless workers—the only group of workers that is still taxed further into poverty. Members of both parties are leading efforts to fix this. The President’s 2016 budget and a nearly identical proposal from House Ways and Means Chair Paul Ryan (R-WI) propose lowering the EITC’s eligibility age from 25 to 21 for childless workers and raising their maximum credit. Senator Sherrod Brown (D-OH) and Representative Richard Neal (D-MA) have similarly proposed improvements for these workers.
Our tax preparation field serves millions of low-wage workers every year. These Americans are striving to build a better life for themselves and for their children, and every year we see that the EITC and CTC help make that possible. Congress should act as soon as possible to make these critical EITC and CTC provisions permanent and plug the gap in the EITC for childless workers.