Tax Day is one of the most important days on the calendar when it comes to the fight against poverty.
Today, many working families in Oregon struggling to pay the bills will claim on their tax returns the Earned Income Tax Credit (EITC), one of the most effective anti-poverty tools available. There is a federal EITC and a much smaller Oregon EITC, and they both boost the take-home pay of working families.
The EITC has been around since the 1970s, so it’s a program with a long track record — a record of success. Researchers who’ve looked at the impact of this tax credit have found that the EITC:
- Incentivizes work, as it makes work more financially rewarding
- Results in healthier children with greater academic success, meaning a lifetime of returns on investment
- Boosts local economies, as EITC recipients tend to spend the dollars locally and quickly in meeting their basic needs
With such a record of success, it’s no wonder that this tax credit has enjoyed strong bipartisan support over the years.
The EITC works by offsetting a person’s income taxes. If the credit is larger than taxes owed, the person gets the balance in the form of a cash refund. Most people eligible for the EITC get a refund. And for many households, the credit amount is substantial. For instance, the average federal credit for families with children in Oregon is $2,900 — an amount that makes a difference when it comes to fighting poverty.
Right now, some 900,000 Oregonians — including one in every four children — benefit from the EITC. Their economic circumstances are unquestionably better because the EITC is in place. That’s something worth celebrating this Tax Day.
As good as the EITC is, it can be better. And it needs to be better, because Oregon’s EITC is small. Among all states that provide their own EITC, Oregon’s is one of the smallest at just 8 percent of the federal credit. Meanwhile, families in our state face rapidly rising rents and jobs that don’t pay enough. A significant boost to the Oregon EITC — as House Bill 3028 would do — is what cash-strapped working families need now.
This Tax Day, file your return if you haven’t already and be sure to check if you qualify for the EITC. And after that, take a moment to urge your Oregon legislators to boost this vital tax credit that fights against poverty.