Oregon ranks third worst in use of anti-poverty tax credit

News Release
January 24, 2017 Download PDF

Oregon ranks near the bottom when it comes to the share of qualifying families that claim the federal Earned Income Tax Credit (EITC), better than only two states. That poor participation level is costing the state’s economy about $130 million per year in forgone federal dollars, according to the Oregon Center for Public Policy.

About a quarter of eligible Oregon working families do not claim the federal EITC, said the Center in a paper that analyzed the most recently-available data, representing tax year 2013. The Earned Income Tax Credit helps low-income households make ends meet, and enjoys bi-partisan support as an effective anti-poverty tool.

“Low-income working families have an even harder time getting by when they miss out on this tax credit,” said Juan Carlos Ordóñez, the Center’s communications director. “It also means that fewer federal dollars are flowing into businesses in communities throughout Oregon.”

Oregon’s poor performance in 2013 was not unusual. For several years the state has ranked at or near the bottom nationally in terms of EITC participation rate, according to analyses by the IRS, the Center said.

While the reasons why Oregon ranks so poorly are not altogether clear, research has shown that certain categories of working families are less likely to claim the credit, according to the Center. They include families that live in rural areas, are self-employed, do not have a qualifying child or are not proficient in English.

Last year, the Oregon legislature considered options for improving the state’s EITC participation rate, but ultimately took no action.

“Inaction means low-income families are struggling more than they need to and Oregon’s economy is missing out on millions of federal dollars,” Ordóñez said. “The 2017 Oregon legislature needs to design, fund, and implement a solution to this problem.”

The Center recommended that the legislature make the Oregon Department of Revenue responsible for promoting the credit among potentially eligible families.

The Oregon Center for Public Policy (www.ocpp.org) is a non-partisan, non-profit institute that does in-depth research and analysis on budget, tax and economic issues. The Center’s goal is to improve decision making and generate more opportunities for all Oregonians.

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