Tuesday, April 9, 2013
Contact: Jenny Davies-Schley, 720-296-9545
Working Family Tax Credits Good for Colorado’s Kids and Economy
SB1’s EITC and Child Tax Credits Will Strengthen Future Workforce
DENVER – Giving a boost to the effort to pass SB13-001 (SB1), the “Colorado Working Families Economic Opportunity Act,” brand-new research released by the Center on Budget and Policy Priorities and the Colorado Fiscal Institute shows that children in families who receive the federal Earned Income Tax Credit (EITC) do better in school, are more likely to attend college and earn more as adults. The Child Tax Credit (CTC), a related credit that helps with the costs of raising children, also plays a major role in supporting working families as they strive to reach the middle class.
SB1, the “Colorado Working Families Economic Opportunity Act,” would reinstate a state-level EITC and CTC in an effort to give working families economic stability, increase education outcomes for their children and stimulate local economies. SB1 passed the Senate Judiciary Committee unanimously with bipartisan support last Wednesday, and is expected to be considered by the Senate Appropriations Committee on Friday, April 12, 2013.
In Colorado, 363,000 households benefited from the EITC and 307,000 from the CTC in 2010, according to the report. Combined, the credits lifted 153,000 Coloradans out of poverty that year, including 83,000 children.
“Not only do these credits help keep parents in jobs, they also help their children – our future workforce – succeed in the long run,” said Ali Mickelson, Tax Policy Attorney at Colorado Fiscal Institute. “Making sure that our children get the education and skills they need for successful careers is vitally important to Colorado’s future economy.”
Working family tax credits are a proven approach that turns a small investment into big returns. The new report examines the body of EITC research and compiles significant findings:
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 a poor family’s income by $3,000 a year (a fairly typical amount for a poor family to receive from the 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.
“Federal tax credits for working families encourage parents to be self-reliant, to take responsibility, and to work hard at jobs so that they can do their best for their children,” said Chuck Marr, co-author of the report and director of federal tax policy at the Center on Budget and Policy Priorities. “They encourage work over welfare. And they aim to achieve the American ideal of giving everybody a chance to succeed in life.”
The Center’s full report can be found at: http://www.cbpp.org/cms/?fa=view&id=3793. An infographic is attached.
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: http://www.coloradofiscal.org