Voices for Children supports this expansion of the Earned Income Tax Credit (EITC) because it is good for children and families. In 2007, Nebraska expanded the EITC to 10% of the federal EITC and LB 956 would take the next step to increase the credit to 13% and put us on par with neighboring states.
The EITC incentivizes work and helps offset some of the other taxes low-income working families pay. It also helps keep families above the poverty line. Over 130,000 households in Nebraska or almost 1 in 6 income tax filers benefits from the state EITC. In Nebraska, the EITC kept 38,009 people – 19,028 of whom were children – above the poverty line.
In order to receive the EITC families must be working and earning wages. Most of the families claiming the EITC in Nebraska have adjusted gross incomes between $10,000 and $20,000 a year. For families in this income range, every penny counts and helps them meet their basic needs.
We recently released the Family Bottom Line Report showing what families need to earn to meet their “bottom line.” The report has an online interactive tool that customizes expenses by Nebraska county and family size. This report shows why the EITC is important because it would return dollars to working families who are struggling to meet their bottom line.
In addition to the economic impact, studies also show that the increase in family income from these credits is associated with increases in student achievement in school as well as the child’s future earnings as an adult. The investment we make in working families through the EITC puts children on a solid path to a prosperous future both for themselves and our economy.