By Samantha Curran
CFI Communications Associate
Despite the current ambiguity with potential changes in federal policies that could leave millions of struggling families with less support to meet basic needs, Colorado can ensure that all working Coloradans are offered a hand up when struggling with low-wages, by expanding the state’s Earned Income Tax Credit (EITC).
• The EITC helps working families make ends meet. Many low-wage jobs fail to provide sufficient income to get by. State EITCs reduce the taxes paid by low-income working families, allowing them to keep more of what they earn. In turn, this also allows these families to spend more of their income on the local economy.
• The EITC encourages work. By offsetting income taxes for low-wage workers, this credit encourages parents to seek out employment and rewards hard work. In addition, the EITC keeps families working by helping low-wage working families pay for things like child care and transportation, which are essential to continue work.
• The EITC helps working parents better meet their children’s needs. Studies show that when families with low incomes get an income boost, their young children tend to do better and go further in school. The more education a child receives and the more skills they acquire, the greater their earning potential as adults. This leads to a stronger future economy.
Colorado is one of 26 states plus the District of Columbia that have enacted their own version of the federal EITC to help low-wage working families meet basic needs. However, under current law, low-wage workers not raising children in the home and adults under the age of 25 are ineligible to receive the EITC. Former President Obama and House Speaker Paul Ryan proposed nearly identical plans to address this issue. Their proposal would expand the EITC for workers not raising children and lower the eligibility age to 21.
Colorado does not have to wait for federal action however. We can expand our state’s EITC to benefit all workers struggling to get by on low wages.
In addition to the 377,000 Colorado households that benefited from the EITC in 2014, about 12,000 Colorado veteran and military members, 62,000 Colorado workers between the ages of 21 and 24 and 24,000 low-wage workers in rural Colorado would benefit from an EITC expansion.
The EITC has been proven to help lift hard-working Coloradans out of poverty, but has the power to do much more. While we eagerly wait to see what federal policy changes will be made in the near future, Colorado can show its support for all low-wage working Coloradans, by ensuring they get the boost they need to make ends meet.