The Earned Income Tax Credit: A Fence at the Top of the Cliff

In his book, The Rising of Bread for the World, founder Art Simon remembers an old saying of his dad’s, “It’s better to build a fence at the top of the cliff than to have an ambulance at the bottom.”

The Earned Income Tax Credit (EITC) is a fence, and a small amount of assistance at the right time can prevent long term and devastating poverty.  A new report by Tom Dowd and John B. Horowitz emphasizes the temporary use of EITC, which helps families make ends meet in times of transition. The report published in the Public Finance Review says that most families who receive the credit have young children, low wages, and need it for an average of two years, as outlined last week by The Center on Budget and Policy Priorities.

Last year, we told you how on this blog how EITC got Ian Finch through a rough spot and gave him the footing to build a better future, helping break the cycle of intergenerational poverty.

With the Budget Control Act of 2011, Congress must reduce the deficit by a minimum of $1.2 trillion over the next 10 years.  Since EITC is not discretionary spending, it is exempt from the first phase of the deficit reduction or automatic cuts (sequestration). But for the Super Committee, currently meeting now and negotiating at least $1.2 trillion in cuts, EVERYTHING is on the table.

The bipartisan task force may choose to look at revenues as they negotiate and could conceivably reduce or cut the program that pulls more children out of poverty than any other government program.  Conversely, they could do nothing. They should follow the principle used in the last three major deficit reducing packages and reduce poverty and inequality at the same time as shrinking deficits, in which case EITC could potentially be expanded.

With the recent poverty numbers being the highest rates of poverty since the Great Depression, we know the fence is working.  EITC kept 5.4 million people out of poverty in 2010.

Bread members again must work hard to maintain those life-saving fences for the most vulnerable by speaking up to members of Congress who have the power to either build fences or steepen cliffs.

Robin Stephenson is a regional organizer for Bread for the World who serves Montana.

Photo: Heather Turner uses her EITC reimbursement to stretch her family's budget.