As Poverty Rate Remains Steady, So Does the Importance of EITC
The national poverty rate stopped rising in 2011, remaining relatively steady since the previous year at 15%, according to recent figures from the U.S. Census Bureau. While this means that more than 46 million Americans are still struggling to get by, evidence also indicates that crucial anti-poverty programs are effective.
But that’s still too high and too troubling a figure – and it’s clear that policies supporting people living near or below the poverty line are no less significant than when the poverty rate was rising to the well-being of struggling families.
It is important to bear in mind that if the help of tax credits such as the Earned Income Tax Credit (EITC) and supports such as Supplemental Nutrition Assistance Program (SNAP, or food stamps) were factored into the Census numbers, the number of those officially living under the poverty line would be lowered. You can read a full analysis of the Census data from our friends at the Center on Budget and Policy Priorities (CBPP).
“Census officials said that if counted, the EITC would be seen to have lifted 5.7 million people — including 3.1 million children — out of poverty in 2011, and SNAP to have lifted out 3.9 million people, including 1.7 million children,” according to CBPP.
Behind these numbers are the lives of actual Americans whose day-to-day living circumstances hang in the balance of policy decisions regarding these vital tax credits. One such person is Amy*, a client who has received free tax assistance at a Volunteer Income Tax Assistance site in Springfield, Illinois for several years. She recently remarked how the EITC benefited her in beginning to build-up financial assets.
“I did not have a saving or checking account at the time and didn’t think I would be eligible [for the bank accounts],” she said. Once she got her tax refund, aided by the EITC, she was able to open a checking account with one of the site’s bank partners. “I went on to get a savings account and got my daughter a savings account too,” she explained.
“Getting those savings and checking accounts made it possible for me to get a secured credit card, which helped me get my credit up and then buy a house.”
Tax-policy and deficit-reduction discussions in Washington, DC often lose sight of the impact these tax credits have on the well-being of hardworking families. In fact, key improvements in the EITC, Child Tax Credit (CTC), and the American Opportunity Tax Credit (AOTC) are set to expire in December unless congressional action is taken.
As Amy’s story illustrates, struggling, working families can’t afford to lose the targeted help of those credits. The most recent poverty statistics serve to remind us that there are millions of households across the country just like Amy’s, who are striving to make ends meet, and that crucial safety net programs are effectively helping them escape poverty and achieve a sense of financial security.
* Client’s name changed to protect her privacy
By Gail Parson, Manager of Civic Engagement