When Georgians think about the best ways to fight poverty and help more families climb the economic ladder, tax credits probably aren’t the first things that come to mind. But new data released last week by the U.S. Census Bureau confirm that the federal Earned Income Tax Credit, or EITC, and Child Tax Credit, or CTC, are among the strongest anti-poverty tools in the nation’s toolbox. And the data arrive at an opportune time, as Georgia lawmakers face several opportunities to strengthen the credits at both the federal level and the state Capitol.
The U.S. Census Bureau releases a slew of new numbers each fall tallying things like household income, health coverage and poverty.
This year’s data follow a pattern of recent years, illustrating Georgia’s continued struggle with stagnant income and high levels of poverty.
This is despite some recent improvements, especially with Georgians’ ability to access affordable health care.
The new census data reveal Georgia’s official 2014 poverty rate was 18.3 percent, meaning nearly 1 in 5 Georgians fell below the federal poverty line of $24,000 for a family of four. Children fared even worse, suffering a poverty rate that now stands at an estimated 26.3 percent, basically unchanged from a year before.
These numbers provide an important snapshot of how Georgians are doing, but they don’t tell us everything. The official poverty rate only looks at pre-tax income, so it leaves out the boost Americans receive from certain programs designed to help them achieve economic success.
This is where the EITC and CTC come in. The tax credits provide up to a few-thousand dollars a year to workers in jobs that don’t pay a lot of money, such as retail sales, food service and construction. That allows families to keep more of what they earn and afford things like child care and transportation that help them work their way out of poverty and into the middle class.
The EITC and CTC combined to lift an estimated 9.8 million Americans out of poverty in 2014, more than any program besides Social Security. In Georgia, the credits lifted an estimated 400,000 people — including 223,000 children — out of poverty annually from 2011 to 2013.
The tax credits are clearly central to Georgians’ ability to make ends meet, support their families and continue striving toward the middle class. Their long, successful track record explains why presidents of both parties enhanced and enlarged the credits on several occasions over the past three decades.
But there’s more to be done, both in the U.S. Congress and at Georgia’s state Capitol.
First, portions of the federal credits are in jeopardy.
Some new provisions added in 2009 as part of the American Recovery and Reinvestment Act are set to expire in 2017. An estimated 626,000 Georgians — including 302,000 children — will fall into or deeper into poverty if that happens. That’s why Georgia’s representatives in Washington should lead the charge to save these key portions of the EITC and CTC as Congress considers tax legislation this fall.
Second, 26 states and the District of Columbia build on the success of federal tax credits with their own state-level EITCs. A GBPI report published last month makes the case that Georgia should join the club when the General Assembly returns to work in January.
State EITCs are a targeted, affordable way to cut state taxes from the bottom up, help workers reach the middle class, strengthen small businesses and bolster local economies.
Pro-family tax credits, though not the most widely known tool against poverty, are among the most important. Georgia’s leaders should take notice and help ensure they continue making lives better for decades to come.
Tharpe is senior policy analyst for the Georgia Budget and Policy Institute, an independent think tank that analyzes budget and tax policies and aims to inspire responsible decision-making.