From the League of Women Voters of Charlotte-Mecklenburg:
The League of Women Voters of Charlotte-Mecklenburg worked diligently during the 2013 session to prevent the reduction and repeal of the Earned Income Tax Credit. Legislators should reinstate this benefit for working families who are not earning enough to rise above poverty.
While the EITC was not a windfall, it did help families overcome the taxes they must pay such as sales, gas, utility and property taxes in addition to income taxes. These taxes, combined, result in low income residents paying a higher percentage of their income (9.5 percent) than the richest North Carolinians (less than 7 percent), according to the NC Justice Center.
In the last session, the Legislature reduced the state EITC for 2013 from 5 percent to 4.5 percent of the federal EITC and totally ended the credit after the 2013 tax year. This, despite both Republicans and Democrats calling it one of the most successful anti-poverty programs because it benefits children and families who are employed in low-wage jobs.
This small benefit of the state EITC, which had averaged about $119 per family, may have provided a low income worker's family a week's worth of groceries, a car payment so they can get to work or some school supplies for their children.
The benefit of EITC, however, is not just for the family who receives it. Because it is quickly used for necessities, merchants and other businesses in the county in which the family resides benefit too. Similar to other government spending such as Social Security payments and unemployment, EITC benefits a community's economy as well. The NC Justice Center reports that one dollar going into a county becomes three as it goes to the grocer, the convenience store or the gas station and is critical to those NC counties where the tax base is small.
For example, in 2012 in Swain County, 1,889 tax filers receiving the credit could return $205,240 to the county. For the 85,331 Mecklenburg residents filing for EITC, the county could realize $10,758,579, according to NC Justice Center.
The LWVC-M, a non-partisan organization, supports an equitable and efficient tax system that reflects today’s economy and produces enough revenue to fund needed services. To that end, the League strongly supports reinstating North Carolina's refundable EITC and raising the state's percentage of the federal credit back to five percent.