The Earned Income Tax Credit (EITC) is a powerful tool for
helping low-income working families, but to effectively raise Marylanders out
of poverty and foster broad-based prosperity, it must work alongside other
measures, including a boost in the minimum wage.
Recently, some policymakers in Maryland have portrayed the EITC as some kind of super-policy that can
fight poverty on its own, but this is
not the case.
The EITC – a federal tax credit that Maryland supplements
with a state
EITC -- makes low-wage work more viable for families by offsetting some of
the taxes they pay and boosting their income. However, as the non-partisan
Center on Budget and Policy Priorities pointed out
this week, there are some things that the EITC cannot do, like helping people
who are out of work or unable to work, or helping the poorest families that do
not make enough to qualify for the credit.
In addition, because families reap the benefits of the EITC
once a year when they file their taxes, it does not help them when they may
need a boost the most, like when the monthly rent is due or they need to repair
the car they use to get to work. More broadly, because the EITC is based on
wages, it does not automatically expand to stabilize the economy during
recessions, the way that other services, like nutrition assistance, do.
The EITC also does not provide workers with health
insurance.
Because of these limitations, we need other policies to
complement the EITC, including nutrition assistance, access to health insurance
through programs such as Medicaid, and unemployment insurance to see individual
workers through job losses and help the economy as a whole through downturns.
And, of course, a robust
minimum wage that keeps up with the cost of living and allows workers to
support themselves and their families.
Maryland policymakers need to recognize the importance of making
these programs and policies work together on behalf of working families. For
instance, as they consider legislation that would make the state’s EITC more
generous, state lawmakers also should finish the task of raising the minimum
wage. That would build on the strides Maryland has made recently in improving
access to health care by expanding
Medicaid and working to
implement the Affordable Care Act.
It’s fortunate that so many policymakers agree the EITC is
an important and effective way to provide economic assistance to working
families in Maryland. The current proposal to expand the state EITC enjoys
bipartisan support in the General Assembly, and the EITC has also won praise from conservative
lawmakers such as U.S. Rep. Paul Ryan. Unfortunately, some
of this acclaim portrays the EITC as an
alternative to other policies such
as raising the minimum wage, rather than as a supplement to those things.
The EITC is an important policy, but we should not rely on
it to do everything. There is no silver bullet capable of singlehandedly ending
poverty. Instead we need lots of programs and ideas to peck away at it from
every angle.
