This is an archived article that was published on sltrib.com in 2012, and information in the article may be outdated. It is provided only for personal research purposes and may not be reprinted.
By Deborah Bayle
The federal Earned Income Tax Credit was established in 1975 and has helped ease the tax burden and raise the incomes of millions of working families.
No government initiative has done more to lift working families out of poverty. President Ronald Reagan called the EITC "the best anti-poverty, the best job creation, the best pro-family measure to come out of Congress."
The EITC rewards work! It has enjoyed strong bipartisan support for three decades. Only working people qualify for the EITC, which reduces a worker's income tax and mitigates sales, payroll and other taxes they pay.
The tax credit boosts take-home pay by several hundred dollars a year — money that means so much to families that have nothing to spare in their budgets. On average, Utah families only claim the credit for two or three years and then become ineligible due to increased income.
New research indicates that when the federal EITC increases family income by just $1,000 a year for two years, children's math and reading scores increase by an average of 6 percent. These achievement gains are even larger for children from more disadvantaged backgrounds, for younger children, and for boys. Since higher math and reading scores lead to long-term academic success and improved graduation rates, this study suggests that children of federal EITC recipients may receive lasting benefits that ultimately improve their life chances as an adult.
From 2007 to 2011, the state's investment of $436,000, combined with an investment of $684,000 from the federal government, local businesses, United Way of Salt Lake and other nonprofit organizations, has brought over $77 million in total refunds to low- and moderate-income Utahns.
This vital funding has created a public-private partnership that works to ensure that people eligible for the EITC are aware of the credit, claim it and reinvest it to improve their lives. Hundreds of volunteers work in communities across the state to establish free tax preparation sites, where families can go to get their taxes filed and claim the EITC and other credits. A call to United Way 2-1-1 allows families to set an appointment.
The Legislature has been a key partner in this effort. Through this partnership, parents are given the chance to change the odds of success for themselves and their children.
In the three decades since the federal EITC went into effect, 25 states have taken the next step and established a state version of the EITC. From Virginia to Oregon, these state credits have helped working families keep more of their income, providing them an extra measure of economic security. The same would be true in Utah.
A state EITC is simple to implement and administer. But most important, it provides meaningful tax relief to working families who need it most. More than a quarter of all Utah families with at least one working adult are considered low-income. Strengthening the financial stability of these working families should be a state priority.
Our Legislature should continue to invest in hardworking Utah families and take a much-needed step and establish a state EITC. This state version of the Earned Income Tax Credit is long overdue.
Deborah Bayle is the president and CEO of United Way of Salt Lake.