5 things you should know about the EITC (Earned Income Tax Credit)
1. Both sides of the aisle are singing the praises of EITC programs. Since its inception, the EITC has received broad bipartisan approval because it supports working Americans and has been the most effective measure ever enacted to help families leave poverty behind.
2. Without a state level EITC, Arkansas is missing out on its full share of one of the most successful antipoverty measures ever introduced. Unlike about half of the states in the US, there is no state level EITC in Arkansas.
3. EITC programs encourage work and help families move out of poverty. A state EITC in Arkansas would piggyback on the federal version, which is proven to encourage considerable numbers of single parents to leave
welfare and enter the workforce. EITCs did more to increase employment among single mothers than either welfare reform or economic recovery during the 1990s.
4. Local economies benefit from EITC programs. One study found that every dollar of EITC refunds resulted in $1.58 in total economic activity, and every $37,000 resulted in a permanent job added to the community.
5. State level EITCs are threatened by “non-refundable” options and by greedy “refund anticipation checks” (RACs). RACs target taxpayers at the time of filing and are similar in concept to predatory payday advance loans with their deceptive and unnecessary fees. Ensuring that the EITC is refundable is particularly important for Arkansas workers living in extreme poverty, because they often do not pay enough in income taxes to qualify for a meaningful credit without the refund portion.