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A NC EITC supports working families whose earnings don’t meet the costs of basics

June 10, 2022
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Income poverty — or not having enough to afford the basics — increases the odds of negative physical and behavioral health outcomes for people in the form of disease and early death. The costs, lost wages, and lack of economic opportunity associated with poor health also trap people in poverty, subjecting children to the same poverty in which their parents grew up. State-level tax credits like the Earned Income Tax Credit would return more of what low- and moderate-income North Carolinians earn and would benefit the health and well-being of parents and children, along with improving child education and future earnings outcomes.

A NC EARNED INCOME TAX CREDIT WOULD:

  • Benefit 900,000 (close to a million) North Carolina families1Atwa, Heba. November 2019. State EITC could improve the health of North Carolinians, NC Justice Center. Accessed at: https://www.ncjustice.org/wp-content/uploads/2019/11/BTC-Report-on-EITC.pdf
  • Provide a $500 boost to a family’s budget for necessary expenses, if generous and refundable2If state-level EITC were set at 20 percent of the federal credit, based on the average NC EITC, available at: https://www.eitc.irs.gov/eitc-central/statistics-for-tax-returns-with-eitc/statistics-for-tax-returns-with-the-earned-income
  • Be available to all families regardless of whether they have to pay income taxes

BENEFITS:

  • Improve infant and maternal health3Atwa, Heba. November 2019. State EITC could improve the health of North Carolinians, NC Justice Center. Accessed at: https://www.ncjustice.org/wp-content/uploads/2019/11/BTC-Report-on-EITC.pdf
  • Reduce food insecurity and allow families to buy more and healthier food4Atwa, Heba. November 2019. State EITC could improve the health of North Carolinians, NC Justice Center. Accessed at: https://www.ncjustice.org/wp-content/uploads/2019/11/BTC-Report-on-EITC.pdf
  • Reduce the risk factors associated with child physical abuse and neglect5Rose-Waters, Melea. 2021. NC Earned Income Tax Credit, Prevent Child Abuse NC. Accessed at: https://www.preventchildabusenc.org/wp-content/uploads/2021/06/pcanc_EITC.pdf
  • Increase labor force participation for parents6Schanzenbach, Diane Whitmore and Michael R. Strain. October 2020. Employment Effects of the Earned Income Tax Credit: Taking the Long View, National Bureau of Economic Research
  • Improve earnings for parents and children as adults7Schanzenbach, Diane Whitmore and Michael R. Strain. October 2020. Employment Effects of the Earned Income Tax Credit: Taking the Long View, National Bureau of Economic Research

WHY NOW?

Too many North Carolinians earn less than what it actually takes to make ends meet in our state. In the average family of four, both parents must work a minimum of 92 hours per week at minimum wage just to meet the family’s basic needs like food, stable housing, transportation, and child care.8Harrington, Neil, Patrick McHugh, and Logan Rockefeller Harris. May 3, 2022. The 2022 Living Income Standard, NC Budget & Tax Center. Accessed at: https://ncbudget.org/lis/ Meanwhile, lower income North Carolinians are asked to pay more in taxes as a share of their income than wealthier North Carolinians pay.

  • Housing costs in many areas of our state are outpacing wage growth9Salzberg, Rachel. July 29, 2019. Escalating rents, flat wages driving a housing crisis in many NC communities, NC Justice Center. Accessed at: https://www.ncjustice.org/publications/escalating-rents-flat-wages-driving-a-housing-crisis-in-many-n-c-communities/
  • The basics are getting more and more difficult to afford10BTC Analysis of Bureau of Labor Statistics, Consumer Price Index, Food at Home in the South, 2012 to 2022, Tables CUUR0300SAF11,CUUS0300SAF11
  • Our tax system is increasingly upside-down, asking those paid the least to pay the highest share of their incomes in state and local taxes.11Wiehe, Meg, Aidan Davis, Carl Davis, Matt Gardner, Lisa Christensen Gee and Dylan Grundman. October 2018. Who Pays? A Distributional Analysis of the Tax Systems in All 50 States, Institute on Taxation and Economic Policy. Accessed at: https://itep.sfo2.digitaloceanspaces.com/whopays-ITEP-2018.pdf

Our government should ensure everyone has what they need to meet their basic needs — whether they are White, Black, or Brown — through a state EITC that lets families keep more of what they earn.

Footnotes

  • 1
    Atwa, Heba. November 2019. State EITC could improve the health of North Carolinians, NC Justice Center. Accessed at: https://www.ncjustice.org/wp-content/uploads/2019/11/BTC-Report-on-EITC.pdf
  • 2
    If state-level EITC were set at 20 percent of the federal credit, based on the average NC EITC, available at: https://www.eitc.irs.gov/eitc-central/statistics-for-tax-returns-with-eitc/statistics-for-tax-returns-with-the-earned-income
  • 3
    Atwa, Heba. November 2019. State EITC could improve the health of North Carolinians, NC Justice Center. Accessed at: https://www.ncjustice.org/wp-content/uploads/2019/11/BTC-Report-on-EITC.pdf
  • 4
    Atwa, Heba. November 2019. State EITC could improve the health of North Carolinians, NC Justice Center. Accessed at: https://www.ncjustice.org/wp-content/uploads/2019/11/BTC-Report-on-EITC.pdf
  • 5
    Rose-Waters, Melea. 2021. NC Earned Income Tax Credit, Prevent Child Abuse NC. Accessed at: https://www.preventchildabusenc.org/wp-content/uploads/2021/06/pcanc_EITC.pdf
  • 6
    Schanzenbach, Diane Whitmore and Michael R. Strain. October 2020. Employment Effects of the Earned Income Tax Credit: Taking the Long View, National Bureau of Economic Research
  • 7
    Schanzenbach, Diane Whitmore and Michael R. Strain. October 2020. Employment Effects of the Earned Income Tax Credit: Taking the Long View, National Bureau of Economic Research
  • 8
    Harrington, Neil, Patrick McHugh, and Logan Rockefeller Harris. May 3, 2022. The 2022 Living Income Standard, NC Budget & Tax Center. Accessed at: https://ncbudget.org/lis/
  • 9
    Salzberg, Rachel. July 29, 2019. Escalating rents, flat wages driving a housing crisis in many NC communities, NC Justice Center. Accessed at: https://www.ncjustice.org/publications/escalating-rents-flat-wages-driving-a-housing-crisis-in-many-n-c-communities/
  • 10
    BTC Analysis of Bureau of Labor Statistics, Consumer Price Index, Food at Home in the South, 2012 to 2022, Tables CUUR0300SAF11,CUUS0300SAF11
  • 11
    Wiehe, Meg, Aidan Davis, Carl Davis, Matt Gardner, Lisa Christensen Gee and Dylan Grundman. October 2018. Who Pays? A Distributional Analysis of the Tax Systems in All 50 States, Institute on Taxation and Economic Policy. Accessed at: https://itep.sfo2.digitaloceanspaces.com/whopays-ITEP-2018.pdf