June 19, 2015
A Gift that Keeps on Giving
This Father’s Day, let’s skip the tie and let dads keep more of their hard-earned money by supporting tax credits for working families.
The federal Earned Income Tax Credit (EITC) helps families by reducing what they owe in federal income tax. When the value of the EITC is greater than what they owe in income tax, they get the difference back in a cash refund. With more money in their pockets, dads can better pay for basic necessities that help them get to work and stay working like food, housing, childcare, and transportation. In 2012, the federal EITC helped 216,000 working fathers in Virginia pay the bills.
When the recession hit, Congress threw working families a lifeline by letting them keep more of their income through the EITC. Even though we’re well into the recovery, many are still unable to earn enough to meet their basic needs. But that additional help will disappear at the end of 2017 unless Congress takes action. Nationwide, working families would lose an average of $840 in EITC benefits. That’s a lot of money to take from struggling families.
But there’s something else Virginia lawmakers can do to help working dads that doesn’t require Congress to act. Our lawmakers could make our state EITC refundable.
The state EITC works like the federal credit by reducing state income taxes for working families, but it isn’t refundable like its federal counterpart. Making the state credit refundable would put more hard-earned money back in the wallets of working dads.
It would also help make our tax system more fair. The lowest earning families in Virginia already pay 8.9 percent of their income in state and local taxes while the best-off only pay 5.1 percent. This happens because some local and state taxes, like the sales and property taxes, eat up more of the budgets of low-wage earners.
So forget the tie, skip the golf balls. Our elected officials should give our hard-working fathers something they really need: the financial security to put food on the table, a roof over their family’s head, and gas in the car. Strengthening tax credits for working families is good for Virginians and good for the economy.
–Jeffrey Connor-Naylor, Program Director