Event Date: August 31, 2010, 12:00pm – 1:15pm

“We’re about to begin—or continue—a very important debate,” said Jason Furman, deputy assistant to the president for economic policy and deputy director of the National Economic Council, during a keynote address at the Center for American Progress Action Fund last week on how the tax code has been used to reward and incent working families.

Furman was referring to the fact that when Congress returns from recess next week they will commence the biggest tax debate since the Bush tax cuts were passed in 2001 and 2003. The debate thus far has centered on whether or not the tax breaks for the wealthiest Americans should be allowed to expire. But those with the most at stake in this debate are not upper-income Americans—they are middle-class and low-wage workers for whom refundable tax credits, such as the Earned Income Tax Credit, or EITC, make postsecondary education, homeownership, and savings possible.

Furman argued in his address that presidents on both sides of the aisle have helped make the tax code friendlier to working families over the last 25 years. Enduring credits such as the EITC, the Child Tax Credit or CTC, and additional provisions for expansion and refundability have defied the political logic that “programs for the poor are poor programs,” according to Furman. He cited two of the key reasons for this. One, the credits are part of the tax code, and few opponents would argue to increase taxes. And two, the credits are related to work, a characteristic both parties can support.

A panel of federal, community, and personally affected experts and advocates followed Furman’s remarks and discussed what’s at stake for middle-class and low-wage workers in the upcoming tax debate. Michael Linden, Associate Director for Tax and Budget Policy at the Center for American Progress Action Fund, highlighted the long-term importance of the EITC and the CTC in driving economic mobility, calling them both a “floor and a ladder” out of poverty. If Congress doesn’t reauthorize the changes made to the EITC and the CTC in last year’s Recovery Act by the end of the year, millions of low-income families will be affected, including 600,000 children who would fall below the poverty line.

Meg Newman, who coordinates a site offering free income tax preparation to low-income clients in one of Washington, D.C.’s poorest communities as part of the IRS’s Volunteer Income Tax Assistance program, said she sees the impact of the EITC and CTC changes firsthand. The expanded EITC and CTC have become powerful tools for her clients, with more families claiming the CTC and the average value of an EITC refund increasing substantially. Newman noted that the EITC helps her clients keep their jobs, pay down debt, cover basic expenses, and helps them avoid foreclosure or eviction.

But no one can appreciate the EITC and the CTC more than panelist Barbara Izquierdo, a working mother of two children who said, “The EITC changed my life.” For Barbara, these credits not only help her pay her bills and begin saving for college, but they also give her the independence, determination, and hope she needs to give her children a better life.

Middle-class and low-wage workers have much to lose in the looming tax debate. As policymakers return from recess and make critical decisions on the extension of these expanded tax credits they should think of Barbara and the millions like her, and make the tax code work for working families.

Seven candidates and more than 200 citizens attended the gubernatorial candidates’ forum sponsored by A Minnesota Without Poverty and the Joint Religious Legislative Coalition on Monday, May 14. The candidates in attendance pledged that if elected they would attend a December 9 event planned by A Minnesota Without Poverty. The three partners in Minnesota are following that up by encouraging members to attend candidate forums around the state. A Minnesota Without Poverty has identified seven questions about poverty and opportunity to ask candidates at forums and in other conversations.

On June 9, 2010, Melissa Boteach, manager of the Half In Ten Campaign, and Sophie Milam, senior policy counsel at Feeding America, released an article detailing the need for better access to summer meals for low-income children. As schools begin to let out this month, many children will face a summer of skipping meals or consuming the cheap, but empty calories that contribute to our nation’s obesity epidemic.

More than 31 million children benefit from the national school lunch program, 62 percent of whom receive free or reduced-price meals. But only one in six of these kids will receive a similarly subsidized summer meal during the summer months. This column outlines specific policy solutions to address the “summer hunger gap” as Congress considers the Child Nutrition bill.

The full article could be read here.

On May 25, 2010, Arkansas Advocates for Children and Families released its report entitled “Child Poverty in Arkansas 2010: A Deepening Problem.” According to the report, 24.9 percent of Arkansas children, or nearly one in four, lived in poverty in 2008. The high rate of poverty not only impacts the ability of individual children to grow into successful adults, but the related health and education impacts can limit growth in Arkansas’ economy. And in our current economic recession, the problem is only getting worse.

Years of research have shown that there are successful methods of reducing the impacts of poverty on children. Examples of such methods include encouraging quality early education and expanding after school and summer programs to help children gain a stronger foothold on their current and future schoolwork.

In addition to enacting solutions that directly benefit children, we must also create an environment in which parents have the tools and ability to provide for themselves and their children. AACF’s report addresses several initiatives aimed at reducing poverty among parents including improved quality childcare, work and income support for parents, adult education, and job training.

AACF’s report can be viewed by clicking here.

On Friday, June 4, 2010, the Half in Ten Campaign sent a letter to members of Congress urging them to support funding for a supplemental federal poverty measure and for the development of an additional economic indicator reflecting what it takes to “make ends meet.” Already, 349 organizations from 42 states have signed onto this letter in support of this funding.

A new supplemental poverty measure will enhance the ability of policy makers to allocate resources by providing a more adequate account of the constraints American families face today and how well federal programs are working in providing pathways out of poverty.  The additional “make ends meet” indicator would represent a more secure level of income for families not only to meet their basic needs, but to get a foothold on the bottom rungs of the middle class.   Together these two indicators would provide better information to Members of Congress in crafting policy to promote family economic security.

Read the full text of the letter below.

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Even as the economy begins to recover, youth are continuing to struggle in the current job market. A May 31 New York Times story highlights the difficulties faced by high school and college students seeking work. In April, individuals aged 16-24 faced a record high unemployment rate of 19.6%. As the NYT reports, this is double the national average. In fact, unemployment rates are directly related to age, and the younger an individual, the less likely he or she is to have a job. Youth unemployment rates not only deprive young people and their families of an immediate source of income, but also lead to long-term consequences in lifetime earnings potential. Although the current high youth unemployment rates may have a number of causes, what is clear is that a number of young people want to get back into the job market. Action needs to be taken so that currently unemployed youth can stay off the streets this summer and develop critical work experience that will allow them to be competitive in future job markets.

One important way to provide these job opportunities for unemployed youth is through federal funding for summer jobs. In fact, last Friday, May 28, the House passed a bill (H.R. 4213) that provided for $1 billion in summer jobs funding. According to estimates by Northeastern researchers, this “$1 billion federal infusion” has the potential to “create some 300,000 job slots this summer.” The passage of this bill in the House marks an essential first step towards assisting unemployed youth in the months to come. However, this funding for summer jobs is not included in the Senate version of the tax extender bill. Fortunately, it is not yet too late—there is still a critical window of opportunity for funding for summer jobs to be included in the final version of this bill after the Senate returns from its Memorial Day recess. To provide economic opportunity and security to America’s youth in both the short run and the long term, the final Congressional version of the tax extender bill must support summer jobs funding of at least $1 billion. Without federal action, unemployed youth will remain, in the words of Adele McKeon, a career specialist with the Boston Private Industry Council, the “silent victims of the economy.”

One of the biggest antipoverty initiatives in President Barack Obama’s budget is his proposal to “make work pay” for low-income families through improvements to the Child Tax Credit (CTC) and the Earned Income Tax Credit (EITC), which will be considered after Memorial Day.

These two policies will make a huge difference in lifting working families out of poverty. However, improvements to both the CTC and the EITC are set to expire at the end of 2010 without immediate Congressional action to preserve and build upon these vital programs.

To learn more about what is at stake in the months to come and find out what you can do to help build the campaign to preserve these critical tax credits, listen to an English- or Spanish-language podcast with Reverend David Beckmann, president of Bread for the World.

Congress voted last year to help hardworking Americans make ends meet by expanding the Child Tax Credit and Earned Income Tax Credit. But the expansions to these critical tax credits will disappear if Congress does not act soon.

Contact your representative today to demand that they don’t let improvements to these credits expire.

Refundable tax credits like the EITC and CTC help ensure that work pays more than welfare, but they are at risk of losing much of their effectiveness. If Congress does not extend the improvements to the programs, a parent who works full time in a minimum wage position will have his or her annual credit reduced from $1,800 to $320 at the end of 2010. This would have a devastating effect on children in low-income families.

Research conducted by the Tax Policy Center reveals that 8 million children would lose the tax credit entirely if Congress allows the current Child Tax Credit improvements to expire, and an additional 10 million children would lose some of the credit. This change would lead as many as 600,000 more children to become poor and 4 million already poor children to fall deeper into poverty, according to the Center on Budget and Policy Priorities.

We must stand up to preserve the 2009 reforms to the Earned Income Tax Credit and Child Tax Credit. But there is room for additional federal leadership, as well. If the current improvement expires, a family’s first $13,000 in wages will not count toward calculating the Child Tax Credit. Congress should change the law so that all earnings count in calculating the credit. A family with two children will receive $2,000 if full-time, year-round minimum wage earnings are all counted; but the same family will receive only $312 if the improvements expire.

Contact your representative today to preserve and improve these essential programs.

May 25, 2010

What is the Earned Income Tax Credit and why does it matter?

The Earned Income Tax Credit is one of the single most important ways to make work pay. The EITC is a refundable federal income tax credit for low-wage working individuals and families. Refundable means that if a worker’s credit exceeds the amount of taxes owed, they can receive the difference in the form of a tax refund. Congress originally approved this program in 1975 in part to offset the burden of payroll taxes and to provide an incentive to work. Today, the EITC remains essential to promote economic security and allow low-income workers maintain a decent standard of living.

The EITC is a public policy that reflects basic values—at its core is the belief that individuals who work full time at minimum wage simply should not be forced to raise families below the poverty line. The EITC helps these Americans earn a sufficient amount so that work pays more than welfare. Parents who earn $10,000 to $20,000 each year are eligible under EITC for the highest credit, and the credit amount decreases as annual earnings increase.

Download this fact sheet (pdf)

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May 25, 2010

What is the Child Tax Credit and why does it matter?

The Child Tax Credit is one of the most important ways to protect families’ economic security. The CTC gives working parents additional funds to help them cope with the rising costs of maintaining a household and raising their children. Depending on the family’s earnings, the CTC allows families to claim up to $1,000 for each child. It represents an essential way to help families achieve and maintain their basic quality of life.

Yet the CTC’s effectiveness depends a great deal on how the credit is structured. The credit was not able to meet its full potential in the past because program rules often denied low-income families the full benefits of the credit. In fact, annual earnings below $13,000 were not considered in calculating tax credit, denying the credit to those who needed it most. Congress made sensible reforms to the CTC last year that allow families to count their yearly earnings below $13,000, but these changes are temporary and are scheduled to expire at the end of 2010.

An end of these improvements would be devastating for low-wage families across America. A parent who works full time in a minimum wage position will have his or her credit reduced from $1,800 to $320 at the end of 2010 if Congress does not make the change permanent. This reduction would seriously threaten the ability of low-income, hard-working families to maintain their economic security and self-sufficiency. And it would push 600,000 children of working families into poverty.

Download this fact sheet (pdf).

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The Minnesota legislature finished its session on May 17. The state had a $3 billion budget deficit this year, but the Minnesota Half in Ten partners and our allies mounted a “Stand Together Minnesota” campaign that helped to defeat proposals from the governor and the House to make serious and deep cuts to the income-assistance provisions in the state’s General Assistance and Temporary Assistance for Needy Families programs.

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