State Earned Income Tax Credit Now Would Help Alleviate Child Poverty in Kentucky

As we learned today through today’s new Census data, more children in Kentucky are living in poverty than in recent years, and so are all Kentuckians. Child poverty in Kentucky increased to 26.3 percent in 2010 from 20.8 percent in 2000, bringing the total number of children who live in families with incomes below $22,050 a year for a family of four to 262,760. Additionally, total poverty rose from 15.8 percent in 2000 to 19 percent in 2010, bringing the Commonwealth into 47th place compared to other states, the District of Columbia and Puerto Rico.

This does not have to be the case. State policymakers have clear, distinct ways to provide support for Kentucky’s struggling families and lift them out of poverty. One way is to enact a state-level, refundable Earned Income Tax Credit (EITC). A state EITC, modeled after the federal EITC currently in place, could help close the gap between what struggling families earn and what they need to make ends meet.

There are plenty of reasons to enact a state EITC:

  1. It would help struggling families and local economies at the same time. The federal EITC is credited for lifting more children out of the poverty in the United States than any other program. A state EITC would build on the benefits of the federal EITC and stimulate Kentucky’s local economies by boosting consumer spending. Studies show that when families receive their federal EITC checks, they quickly spend them on things like groceries, childcare, transportation and health care costs.
  2. It would improve outcomes for children in Kentucky. Research shows a direct link between families receiving additional income through the federal EITC and the improvement of their children’s math and reading comprehension. State EITCs are also correlated to healthier babies and better outcomes across the course of children’s lives.
  3. It would make Kentucky’s tax system fairer. Kentuckians making an average of $36,000 currently pay a larger share of their income in taxes than those making an average of $957,500. A refundable, state-level EITC in Kentucky would help low-income, working Kentuckians keep more of their hard earned money and reduce inequities in the system.
  4. It’s a bipartisan no-brainer. Enacted in 1975 under President Ford, the federal EITC has been expanded under several administrations. Ronald Reagan referred to the federal EITC as “the greatest anti-poverty measure.” President George H.W. Bush and President Bill Clinton also praised the EITC and both proposed expansions to the federal program during their presidencies.

During the last two decades, 24 states and the District of Columbia have established state-level EITC’s to supplement the federal credit and provide additional support to low-income families. It’s time for Kentucky to do the same. This is one investment that is guaranteed to help families now and pave the way for a strong Kentucky for the future.

Speaker of the House, Greg Stumbo has publically committed his support for an EITC, however we have yet to hear from our candidates for Governor on whether they would support it. With the upcoming election, now is a key time to ask them what their plan is for improving economic well-being for children and families in our state.

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