Tues., May 7, 2013
Contact: Jenny Davies-Schley, 720-296-9545
State EITC and Child Tax Credits will boost Colorado kids and economy
DENVER – The “Colorado Working Families Economic Opportunity Act” (SB1) passed Senate concurrence and heads to the Governor for signature. A proven way to give working families economic stability, increase education outcomes for their children and stimulate local economies, the bill would reinstate state-level Earned Income Tax Credits and Child Tax Credits permanently.
“This is a huge victory for Colorado’s working families and children,” said Ali Mickelson, Tax Policy Attorney at Colorado Fiscal Institute. “Not only do these credits help keep parents in jobs and help their children succeed in the long run, but will help us develop Colorado’s future workforce and economy.”
Research recently released by the Center on Budget and Policy Priorities and the Colorado Fiscal Institute shows that children in families who receive these two federal tax credits do better in school, are more likely to attend college and earn more as adults.
In Colorado, 363,000 households benefited from the EITC and 307,000 from the CTC in 2010, according to the report. Combined, the federal credits lifted 153,000 Coloradans out of poverty that year, including 83,000 children.
“I work hard as the office manager of a property management company,” said Dawn Marquantte, an Aurora single mother of four children under the age of 16 and member of 9to5. “Having even just a little boost in my paycheck will help put food on the table and allow my kids to participate in the after-school and other activities that keep them positively focused and out of trouble.”
Working family tax credits are a proven approach with bipartisan support that turns a small investment into big returns. As former President Ronald Reagan said in 1986: “The Earned Income Tax Credit is the best anti-poverty, the best pro-family, the best job creation measure to come out of Congress.”
Widely recognized benefits include:
- Encourages work. Numerous studies have found that the EITC promotes work. For example, EITC expansions between 1984 and 1996 were responsible for more than half of the large increase in employment among single mothers during that period, one study found.
- Improves children’s school performance. Young children in low-income families do better in school if their families receive additional income from the EITC or similar work-based supports, several teams of highly regarded researchers have found.For example, each $1,000 increase in annual income for two to five years led to increases in young children’s school performance on a number of measures, including test scores.
- Increases children’s work effort and earnings once they reach adulthood. For example, raising apoor family’s income by $3,000 a year (a fairly typical amount for a poor family to receive from the combined federal and state CTC and EITC) between a child’s prenatal year and fifth birthday is associated with a significant increase in the child’s earnings in adulthood, another study found.
Colorado Fiscal Institute is a nonprofit, nonpartisan organization that provides credible, independent and accessible analyses of fiscal and economic issues facing Colorado in order to inform policy debates and foster greater economic prosperity for all.