What Would You Do With an Extra $120?

>>BY ALEXANDRA SIROTA

As a mother of three, I think a lot about diapers, clothes, school supplies, dinner plans, and the various other things my kids need to get through each day. Raising kids is expensive. Even though my husband and I have good jobs, we sometimes struggle to balance necessary day-to-day spending with the need to plan and save for the future.

I know that we are fortunate. Thousands of working moms in North Carolina earn wages so low that they can’t even meet their families’ most basic needs, let alone plan for the future. Moms know what is best for our children, but the reality is that many of us can’t always afford to make those investments with what’s left of our paychecks after we’ve paid for taxes, housing, food, clothes, and other bills.

That’s where the Earned Income Tax Credit can help. A state EITC can provide a small wage boost to low-income working parents to help them meet their families’ basic needs. It promotes a future that we all seek: one where our children do better than us and are more financially secure. That would mean a stronger economy for North Carolina, too.

Unfortunately, our state cancelled its state income tax credit two years ago. In an effort to provide an equitable tax burden across all income brackets, state lawmakers took away low income families’ peace of mind, and the ability to plan for the future.

Families in North Carolina still can access the federal Earned Income Tax Credit, which lifts more than 1.5 million women and 2.7 million children out of poverty nationally each year. It is the most effective anti-poverty tool our nation has. And by providing working families with the resources to invest in their children’s healthy development, the EITC builds a pathway over generations to greater financial security.

The EITC is the embodiment of the American Dream. It’s an effective way to ensure that those born into poverty aren’t destined to stay in poverty.

Research shows that the Earned Income Tax Credit is a particularly powerful tool for women. It provides much-needed support to women who are their families’ primary breadwinners and encourages their continued employment in what is often low-wage work. In North Carolina, more than 500,000 women are their families’ sole source of income and more than two-thirds of minimum-wage workers in our state are women.

To support these women, North Carolina must restore a state Earned Income Tax Credit. Before it was cancelled, a million working taxpayers claimed it on their 2013 tax returns. The average benefit was $120, equal to 5% of the taxpayer’s federal EITC.

That state EITC built on the widespread success of the federal credit, and it gave parents a little boost that could help with bills or enable them to do something beneficial for their kids.

State legislative leaders allowed the state EITC to expire so they could cut taxes for wealthy individuals and profitable companies. That choice deprived thousands of families of a little financial wiggle room during tough times. That small credit could have paid for healthier groceries, a long-postponed doctor’s visit, or — given how cold it was last week — a much-needed repair to a furnace or a warmer coat for a child. It even could have been the first payment into a college savings plan.

My hope for my children is not just that they will be happy and successful (however they define that), but also that they live in a community where everyone’s happiness and success is valued and promoted equally. Reenacting the state EITC would be a powerful statement of North Carolina’s values—that we prioritize working families and the well-being of children. Sound policies like the Earned Income Tax Credit can make the dream of a better North Carolina into a reality.

>>Alexandra Forter Sirota is Director at the NC Budget & Tax Center, a project of the North Carolina Justice Center that works to promote sound budget and tax policy decisions that support an economy that works for all.  She has worked on issues of family economic security throughout her career and is the mother of three young children.