Two federal tax credits are responsible for lifting tens of thousands of Wisconsin children out of poverty. Together, the Earned Income Tax Credit and the Child Tax Credit lift 136,000 Wisconsinites out of poverty, including 71,000 children, according to a new report from the Center on Budget and Policy Priorities.
The new CBPP report underscores how important the two credits are to low- and moderate-income families with children. The federal EITC benefits about 390,000 households a year in Wisconsin, and the CTC benefits 296,000 households.
The benefits of these credits go beyond just helping families make ends meet. We’ve long known that in addition to lifting families out of poverty, refundable credits like the EITC encourage work, improve the health of children, and help children do better in school. New, groundbreaking research shows that many of these benefits last into a child’s adulthood. In later life, children whose families receive the credits are likelier to attend college, work more hours, and earn more money.
The extensive list of long-lasting benefits would seem to make investing in these credits a no-brainer. But both the EITC and the CTC have been topics of budget battles recently, as the President and Congressional Republicans disagreed over whether to extend recent temporary enhancements to the credits that were expiring. In the fiscal cliff negotiations, Congress reached a compromise position that extended the enhancements for five years, rather than making them permanent. Those enhancements benefit 155,000 Wisconsin families, including 320,000 children.
At the state level, investment in the EITC has declined – and some policymakers are trying to reverse that. Assemblyman Daniel Reimer has proposed legislation that would restore the cuts in the EITC made in the last budget. Such a move would keep taxes low for working families, and would have long-term benefits for Wisconsin’s children.
For more, go to www.wisconsinbudgetproject.org
Photo by Pam Carlson-Gugel/Bethlehem Lutheran released under a Creative Commons No Derivatives license.