June 2012 U.S. Poverty Action

Tax Credits Are Vital to Low-Income Working Families

Write Members of Congress Urging Them to Extend EITC and CTC Improvements

1. Tell your member of Congress that you support policies that help low-income families lift and keep themselves out of poverty.
2. Remind them that the Earned Income Tax Credit and Child Tax Credit are very effective at poverty reduction; in 2010, these credits lifted 9.2 million people out of poverty, many of them children.
3. Explain that these credits are also good for the economy. Recipients of the EITC and CTC tend to spend these credits quickly and locally, which helps their communities. Economists estimate that for every one dollar in EITC refunds, $1.50 to $2.00 in economic activity is created.
4. Inform them that in 2009, Congress made long-overdue improvements to the EITC and CTC. These changes alone lifted 1.6 million out of poverty in 2010.
5. Tell them that, unfortunately, these improvements will expire at the end of this year. If Congress does not extend them, millions of children and families will be put at risk of falling back or deeper into poverty.
6. Note that some in Congress also want to cut the EITC and CTC as a means to reduce the deficit, while simultaneously pushing for more tax cuts for the wealthy.
7. Ask your members of Congress to speak to House Ways and Means Chairman Dave Camp (R-MI-4) and Ranking Member Sander Levin (D-MI-12) or Senate Finance Committee Chairman Max Baucus (D-MT) and Ranking Member Orrin Hatch (R-UT) and urge them to protect America’s working families by making the 2009 EITC and CTC improvements permanent, and protecting the EITC and CTC from cuts in benefits or eligibility in any deficit reduction package. 

Note: To find contact information for members of Congress, including telephone numbers, addresses, and the name of the aide who handles tax policy, visit our Elected Officials page (http://capwiz.com/results/dbq/officials/). We encourage you to follow up your letter with a phone call to the aide to discuss it. For directory assistance, you can also contact the U.S. Capitol Switchboard at (202) 224-3121.

Low-income Tax Credits Support Families and Reduce Poverty

The Earned Income Tax Credit (EITC) and Child Tax Credit (CTC) are designed to help working families working in jobs that pay too little to live on. Because you have to have earned income to qualify, these credits encourage work while also reducing poverty. The EITC is the largest poverty-reduction program in the U.S. and the CTC is the largest tax provision benefitting children. Anti-poverty advocates have a strong argument for protecting and expanding low-income tax credits. These credits:

• Lift more Americans out of poverty than any other program. In 2010 alone, the EITC lifted 6.25 million people out of poverty. The same year, the CTC protected approximately 2.6 million people fro m poverty, includi ng about 1.4 million children. Some families are lifted above the poverty line only when the two credits work together; all told, EITC and CTC lift 9.2 million Americans out of poverty (the graph to the right sums to 9.3 million due to rounding).
• Strengthen local economies: EITC and CTC households tend to spend their credits quickly and locally, which produces a strong “multiplier effect.” It is estimated that the EITC generates at least $1.50 – $2.00 in local economic activity for every $1 claimed.
• Make work pay: Because these credits grow for low-income workers as their income increase, the EITC and CTC provide a financial incentive for workers to stay employed and increase their earnings. Studies show that this incentive works and that a majority of EITC recipients claim the credit no more than two years.

In addition, these tax credits have a strong history of bipartisan support. The EITC has been praised and expanded by Republican and Democratic administrations like, and has been celebrated by economists across the political spectrum. President Ronald Regan called the program “the best antipoverty, the best pro-family, the best job creation measure to come out of Congress.” Helping low-income working families make ends meet for their children should not be a partisan issue.

ARRA (Stimulus Bill) Makes Long-overdue Improvements to the EITC and CTC

In 2009, the American Recovery and Reinvestment Act (ARRA) expanded the EITC and CTC to help more low-income families. These improvements were long overdue:

These ARRA expansions alone lifted 1.6 million above the poverty line, and reduced hardship for over 7 million people. Unfortunately, these long-overdue improvements are only temporary. In 2010, RESULTS volunteers and our allies successfully lobbied Congress to extend these improvements for two years; they now scheduled to expire in December 2012. If that happens, millions of children and families could fall back or deeper into poverty.

Now is not the time to raise taxes on the lowest-income earners. It is unfathomable that in an economy where so many are still struggling, the House Republican Budget would propose to slash tax rates for wealthy Americans and large corporations while demanding that low-income families pay for them with cuts to the EITC and CTC.

We cannot cut families off at the knees when they’re trying to stand up. The U.S. tax code must reflect the values of our country as a whole — that every person has the opportunity to move up the economic ladder and share in the prosperity of the American economy. The Earned Income and Child Tax Credits have an important role in making this dream a reality.

Sample Letter in Support of Tax Credits for Low-Income Working Families

Dear Sen. _______________,

My name is _____________ and I am a constituent of yours from ____________. I first want to thank you for your recent speech talking about the importance of supporting families in these tough economic times. I agree with you and am writing in support of policies that do just that.

Specifically, I am a strong support of the Earned Income Tax Credit and Child Tax Credit. Did you know that these tax credits are the most effective tools we have at lifting families out of poverty? In 2010, these credits lifted 9.2 million people out of poverty, most of them children. They also help our local economies because families who receive the EITC and CTC tend to spend them quickly and locally. Economists estimate that the EITC creates almost $2 in economic activity for every $1 spent.

Unfortunately, some big changes are looming which could have a dramatic impact on working families. Long-overdue improvements to the EITC and CTC enacted in 2009, which alone lifted 1.6 million out of poverty in 2010, will expire in December. Millions of children and families are at risk of falling back or deeper into poverty. This tax increase is even more egregious when you consider that the House wants to slash taxes for the rich at the same time.

We cannot let this happen. Will you please speak Senate Finance Committee Chairman Max Baucus (D-MT) and Ranking Member Orrin Hatch (R-UT) and urge them to protect America’s working families by making the 2009 EITC and CTC improvements permanent, and protecting the EITC and CTC from cuts in benefits or eligibility in any deficit reduction package. Thank you for your time and attention to this matter. I would appreciate a prompt response to my request.

Sincerely, (Name, address, e-mail)

We will discuss the importance of the EITC and CTC with Debbie Stein of Tax Credits for Working Families on the RESULTS June 2012 National Conference Call — Saturday, June 9, 2012 at 12:30 pm ET. To participate, call (888) 409-6709 with your group by 12:28 pm ET.