Tax Day helps Utah's low-income workers
It might be too soon to talk about the virtues of taxes with Tax Day 2013 barely behind us. Clearly, passions are high on the subject given the number of debates on social media. But, for nearly one in five low-income working Utahns, there is only appreciation.
That is because on Monday, April 15, these taxpayers were finally able to take a child to a long-overdue doctor's appointment, afford reliable transportation to work, pay bills, or go to the grocery store to stock up on food for their families.
Among these 18 percent of all Utah tax filers were the nearly 62,000 Utahns, 33,500 of whom are children, who will be lifted out of poverty. For all of these working taxpayers, Tax Day is a lifeline largely due to the federal Earned Income Tax Credit.
The EITC has received bipartisan support since it was established over 40 years ago by President Richard Nixon due to its success in providing workers struggling to maintain self-sufficiency with a ladder up rather than a hand out. As income inequality has grown, the EITC has successfully prevented low- and moderate-income workers from falling even further behind as their wages continue to erode.
According to the Brookings Institute, more than 188,000 Utah tax filers benefited from the federal EITC in 2011. The tax policy provided these taxpayers an average credit of $2,186, which they quickly spent, returning the credit to the Utah economy primarily through sales taxes.
In a report released last week by the Center on Budget and Policy Priorities (http://bit.ly/Onml6g), the EITC helps children not only during the years in which the parent receives the credit, but even into adulthood.
The report states that not only has the EITC been effective in lifting children in low-income working families out of poverty, it is shown to improve children's school performance, increase the likelihood of college attendance and boost their lifetime earnings. These are positive outcomes for children that cannot be ignored.
Utah can further enhance these benefits while also restoring fairness to its tax code by establishing a state Earned Income Tax Credit. Currently, 23 states and the District of Columbia have made this investment in families and Utah should do the same.
Adopting a state EITC would level the playing field for low- and moderate- income workers who are in some cases paying nearly twice as much in state taxes as their higher-earning counterparts.
The effectiveness of the federal EITC should be a model for Utah. By Tax Day 2014, Utah should have a state EITC in place to enhance the proven benefits of the federal EITC. By making this modest investment, Utah will help our current workforce while ensuring our children get the education and skills they need to help our future economy.
Tracy Gruber is a policy analyst for Voices for Utah Children working in the areas of tax policy and child poverty.