Oregon ranks second worst in terms of EITC use


Oregon ranks second worst in terms of EITC use


Oregon ranks second worst in terms of EITC use

News Release

Oregon ranked next to last in terms of the share of families qualifying for the Earned Income Tax Credit (EITC) who actually claim it, according to an analysis by the Oregon Center for Public Policy of 2018 data. This continued Oregon’s long-standing pattern of poor results, underscoring the need for state action to remove barriers to participating in this key anti-poverty strategy, the Center said.

“Low wage working families have an even harder time getting by when they miss out on this tax credit,” said Janet Bauer, the Center’s Director of Policy Research. “It also means that fewer federal dollars are flowing to businesses in communities throughout Oregon.”

More than one in four working families eligible for the EITC — about 75,000 Oregon families in total — did not claim the credit in 2018, according to the Center. Only Alaska fared worse than Oregon’s EITC participation rate of 73.2 percent in 2018, the most recent year with available data. For several years, the report said, the state has ranked at or near the bottom nationally in terms of EITC participation.

The EITC is both a federal and a state tax credit designed to boost the income of workers who are paid low wages. To benefit from the EITC, an eligible worker must file tax returns claiming the tax credit. In 2018, the federal credit averaged over $2,100 for Oregon families that received the credit. For families with children, the figure was nearly $3,000.

To bring attention to the credit and encourage eligible families to claim it, the federal government established EITC Awareness Day. This year, EITC Awareness Day is January 28.

“It’s crucial that low-wage families know that they can use this tax credit to increase their take-home pay,” said Bauer. “It’s also important that Oregon recognize that there are barriers in the way of families claiming this vital tax benefit.”

Factors beyond lack of awareness also limit the use of the tax credit, the report said. These include the complexity of claiming the EITC, perceived and actual costs in filing a tax return, and language barriers for some filers. Having sufficient free tax assistance is key for many families to get the credit, a service that Oregon falls far short of the need.

Families are not the only ones to lose out when they don’t claim the tax credit; the state loses as well. The Center estimated that Oregon families left unclaimed about $84 million in federal EITC dollars in 2018 — money that did not enter Oregon’s economy.

“We’re not capturing the full benefits of the EITC, including reduced poverty, better health for families, improved academic achievement for children, and even a boost to local economies,” said Bauer. “Low-wage families and Oregon as a whole would be better off if the state invested in culturally-appropriate free tax assistance to remove many of the obstacles that get in the way of families getting this tax credit.”

The Oregon Center for Public Policy 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.

Read the report Oregon Remains Near Bottom in Use of EITC. Click here for a pdf copy.

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Written by staff at the Oregon Center for Public Policy.

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