Congress Should Make Improvements to Working Families’ Tax Credits Permanent

Monday, September 28, 2015 at 1:26 AM by

Congress has a chance this fall to save key provisions of the federal Earned Income Tax Credit (EITC) and the Child Tax Credit (CTC), two proven pro-work strategies that help working families make ends meet and provide the basics for their children.

If Congress does not act, 158,000 Wisconsin families with 301,000 children will lose some or all of their working-family tax credits, according to a new analysis by the Wisconsin Budget Project.

EITC

There is an effort underway in Congress to make several temporary corporate tax provisions permanent, and the debate is expected to come to a head this fall. Some federal lawmakers have advocated for letting these corporate provisions leap-frog over tax credits for working families instead of putting top priority this fall on saving key provisions of the federal EITC and CTC.  Something similar happened during the last major tax debate, when these EITC and CTC provisions were only extended through 2017 but estate tax changes for wealthy families were made permanent.

The Wisconsin Budget Project analysis lays out what’s at stake if Congress fails to extend key provisions of the EITC and the CTC:

  • Married couples in Wisconsin who receive the EITC will be subject to higher marriage penalties. Right now, the income level at which the EITC begins to phase out is $5,000 higher for married couples than for unmarried people. If Congress does not take action, the difference will fall to just $3,000 at the end of 2017.
  • Large families in Wisconsin will have their EITC reduced. The maximum credit amount for families with three or more children will fall more than $700 at the end of 2017, unless Congress acts.
  • A single parent working full time at the Wisconsin minimum wage will no longer earn enough to qualify for the Child Tax Credit. The earnings needed to qualify for any benefit from the CTC will increase from $3,000 to $14,700, barring some parents who work at minimum wage from receiving any benefit from the credit because they earn too little.

Making the improved tax credits permanent would have long-term benefits for Wisconsin families and our state’s economy. Children who get more help from the EITC and CTC see improvements in their health, tend to do better in school, are more likely to go to college, and earn more as adults. That’s good news for the success of Wisconsin’s future economy, which depends on the state having a healthy, well-educated workforce.

As Congress is considering giving businesses significant tax breaks, lawmakers should also be fair to hard-working families by saving key provisions of pro-work tax credits, and keeping the EITC and CTC intact for working families. Doing otherwise will leave behind the working families that use the credits to help improve the long-term economic security of their families.

Read the analysis by the Wisconsin Budget Project: Failure to Save Key Provisions to Tax Credits Would Harm Wisconsin Working Families.

Tamarine Cornelius

Categories: Blog, ECONOMIC SECURITY, FEDERAL BUDGET & TAXES, refundable tax credits | Comments Off on Congress Should Make Improvements to Working Families’ Tax Credits Permanent

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