Tax Increases for Working Families: What’s at Stake for Wisconsin in the Fiscal Cliff
More than 155,000 working families in Wisconsin will pay more in taxes in 2013, unless President Obama and Congressional Republicans can agree to extend tax credits that are set to shrink at the end of the year. Nearly 320,000 Wisconsin children live in families that would be negatively affected if the expanded credits are allowed to roll back as part of the events surrounding the fiscal cliff.
President Obama wants to maintain recent enhancements to the Earned Income Tax Credit (EITC) and the Child Tax Credit (CTC), both of which support work and reduce child poverty. Congressional Republicans favor letting the expanded versions of the credits expire, which would result in a tax hike on working families with children.
Reducing the credits would increase poverty in Wisconsin and hurt the state’s economy. These credits currently lift 70,000 children in Wisconsin out of poverty and reduce taxes for Wisconsin families by a billion dollars each year, according to the Center on Budget and Policy Priorities (CBPP). Here’s how letting the expanded versions of the credits expire could hurt working parents trying to make ends meet, according to CBPP :
- A single mother with two children who works full time at the minimum wage and earns $14,500 per year would lose nearly her entire Child Tax Credit if the improvements expire; her credit would fall from $1,725 to just $165. A loss of $1,560 would be hard to absorb for a family struggling to afford the basics.
- The Urban-Brookings Tax Policy Center estimates that 11 million families nationally would lose an average of $854 from the expiration of the CTC improvements while 7 million families nationally would lose an average of $532 if the EITC improvements expire.
Raising taxes right now on low-income working families in Wisconsin would make it harder for families to make ends meet, and could slow the state’s economy. Federal policymakers should make it a high prioirty to continue the expanded versions of these important tax credits.