108 posts categorized "Tax Credits"
Rosie often has to fight hunger pangs to concentrate in school. Photo courtesy Magnolia Pictures.
As you prepare your taxes, take some time to reflect on where your dollars are going. Many of those dollars go to pay for the infrastructure that holds us together as a nation. Very few go toward helping people in dire need. But those few dollars may hold the most value. Imagine what one dollar’s worth of food means to a senior citizen with an empty cupboard. Think of what a healthy breakfast means to a fifth-grader who would otherwise have to learn arithmetic on an empty stomach.
“I struggle a lot and most of the time it’s because my stomach is really hurting,” said Rosie, an elementary school student in Colorado, describing what it is like to try to learn when she is hungry. “I start yawning and then I zone out and I’m just looking at the teacher and I look at her and all I think about is food.”
Rosie is one of the individuals profiled in the new documentary A Place at the Table. As the film makes clear, the best efforts by congregation and community groups to alleviate hunger are inadequate. Food banks fill a gap, but federal programs provide 95 percent of the food assistance in this country. Tax dollars go directly to programs that help families like Rosie’s. The effect in the lives of people living in poverty is beyond mere calculation.
Our faith calls us to alleviate hunger and poverty and the Bible tells us that government has an important role in making sure that all people are fed, clothed, and sheltered. Thus, the federal budget is a moral document that reflects our national values. Our taxes are a necessary part of that equation, ensuring that the government can fund its priorities.
I was really happy that NPR ran a story on "Morning Edition" last week about the power of the Earned Income Tax Credit (EITC).
At Bread for the World, we know the EITC has the power to change lives. For the last several years we have advocated for this refundable tax credit, and the Child Tax Credit, because both programs provide a hand up and a path out of poverty.
"Morning Edition" reporter Marianne McCune said the EITC, which is “[e]ncouraging poor people to work and giving them a boost for keeping at it" is "relatively uncontroversial—for now.”
The "for now" in McCune's statement is appropriately ominous. The tax credit has had a long history of bipartisan support, but could easily become another political football in the budget debates—despite the fact that it's one of our country's most successful anti-poverty programs.
I know the EITC works and changes lives because I've heard the success stories over and over again. I am always surprised by how many people come up to me in churches after adult forum presentations on the issue and tell me how they have been grateful for the program. “When our family was first starting out, my husband and I were establishing our careers and not making a lot of money, and the couple of years we qualified helped us through until we made enough," is one common tale. Also: "After I was on my own as a single parent, that program got me through the tough times so that I could take care of my children until I could get back on stable ground." One of my colleagues has talked about how vital the EITC has been for his family.
The stories are anecdotal, but they’re backed up by data. Brookings Institute has reported that the benefit, which most families use for just two years, lifts more children above the poverty line than any other government program. In 2011, these credits helped 8.7 million low-income working families avoid severe poverty. Still, personal stories though, such as that of John from the documentary The Line (see below), are as powerful as statistics, and can change hearts and minds—especially on Capitol Hill.
This year’s Offering of Letters, "A Place at the Table," includes advocating again for the refundable tax credits. The American Taxpayer Relief Act extended important improvements to the EITC and CTC, but these will expire in five years. The EITC and CTC are especially vulnerable to cuts now, as Congress simplifies the tax code and curbs deductions. But the low-wage workers who benefit from the EITC and CTC do not have lobbyists to fight on their behalf. Bread for the World members must raise their voices to protect these credits. Contact your members of Congress and voice your support for EITC—you can make a difference in the push to protect this program.
Robin Stephenson is national social media lead and senior regional organizer, western hub, at Bread for the World.
Single father John Lohmeier shops at a food pantry in the Chicago, Ill., suburbs. Lohmeier talks about losing his six-figure salary and needing assistance in the documentary. (Screen shot from The Line)
By Sarah Godfrey
In the documentary The Line, a look at poverty in America, Illinois single father John Lohmeier shares his story of losing his job and six-figure salary and becoming someone struggling to make ends meet. "For the first time, I've gone from being somebody who could help to being somebody who needs help," Lohmeier says.
It seems the line between those who are able to offer assistance and those who need it is becoming increasingly fluid. Case in point: according to a recent report, nearly half of all Americans lack a basic personal safety net to prepare them for emergencies or future needs.
The Corporation for Enterprise Development (CFED) study found that 43.9 percent of U.S. households—some poor, some making more than $90,000 per year—don't have enough savings to last three months at a poverty-level income. For those who don't understand the importance of federal safety net programs, or can't imagine being in a position to need SNAP (formerly food stamps), WIC, or other forms of assistance, the study should serve as a powerful wake-up call.
The good news is that saving money, even in relatively small amounts, can help put families on better financial footing. And saving money and getting rid of debt isn't something that is only accessible to wealthy and middle-class families. The importance asset building in fighting poverty was explored in the 2010 Hunger Report piece "Incentives to Build Savings." As the Hunger Report points out, it is harder for poor people to save money, it’s a misperception that they don’t or won’t save:
Having emergency savings can help families better weather an economic setback. Research has found that households with assets are much less likely to suffer serious hardships in the event of an economic emergency, such as a job loss. Families without emergency savings, on the other hand, are much more vulnerable to economic catastrophe, such as foreclosure, homelessness and dependence on public assistance.
Research shows that people with incomes well below the poverty line are able to save. A national research study known as the American Dream Demonstration tested the effectiveness of asset-development programs for poor people. People were saving to build assets such as homeownership, education, or starting a business.
Unfortunately, snips to our social safety net make saving money even more difficult. Andrea Levere, president of CFED, told Salon that the study's findings were “particularly disturbing given the ongoing budget talks in Congress that will likely result in further reductions in the social safety net and other programs that help low- and moderate-income people get on their feet and start planning and saving for a better future.”In other words, it is crucial that we continue to work to protect vital safety net programs and to ensure that Congress, in balancing the federal budget, doesn’t make it impossible for poor working families to balance their household budgets.
Sarah Godfrey is Bread for the World's associate online editor.
You probably already know that tax credits are a huge help to low-income working families. The Earned Income Tax Credit (EITC) and Child Tax Credit(CTC), which qualifying families receive when they get their federal income tax refunds, assist millions of people each year. In 2011 alone, the EITC lifted 3.3 million children out of poverty. But did you know that refundable tax credits also boost the U.S. economy?
Center for American Progress has released a cool infographic showing exactly how the EITC helps working families, and the think tank also looks at how tax credits affect this country's fiscal fitness.
"Not only does the earned income tax credit keep millions of working families from slipping into poverty each year, it also leads to positive outcomes for family health and student education," writes research associate Katie Wright. "Earned income tax credit dollars benefit our economy, and most families who receive the credit end up paying billions of dollars more in net federal income tax than they receive in the earned income tax credit over time."
The fact that the EITC helps so many families each year is reason enough to support the credit—that the anti-poverty program has such positive, far-reaching effects is just one more mark in its favor.
Want to learn more about how the benefits of the EITC? Take our EITC quiz, read one family's story of how receiving the EITC helped lift—and keep—them out of poverty, and then take action by telling your members of Congress to make the EITC and CTC permanent.
Heather Rude-Turner credits the Earned Income Tax Credit with helping keep her out of poverty and get her back on her feet. Once Rude-Turner marries her fiancé Mark Diamond (pictured) and they combine their incomes, they will likely become ineligible for the EITC. (Laura Elizabeth Pohl/Bread for the World)
By Marsha Casey
Hardship and economic struggle have taken a toll on many Americans. The high price of gas, public transportation, and food means low-income workers are often left to choose between paying their bills, spending money to get to work, or eating and providing for their families.
Federally funded safety-net programs such as SNAP (formerly food stamps) play a major role in preventing more Americans from falling into poverty. But even with programs like SNAP, which helps those with limited income to feed themselves and their families, putting food on the table is still a constant struggle.It's especially difficult in Mississippi, Alabama, and Delaware—the states that have the highest rates of food insecurity in the nation. A recent study on the inability of Americans to afford food showed that one in every four Mississippi residents didn't know where their next meal would come from at least once during the last 12 months.
So what do we do for those Americans who are barely “making it?" How do we help the father who makes only enough money to pay his family’s household bills or the single mother who works longs shifts but still can't feed her children? The Earned Income Tax Credit (EITC) and the Child Tax Credit (CTC) are in place to help low- and moderate-income families. The EITC helps low-income working people keep more of the money they earn, while the CTC provides qualifying families with as much as $1,000 per child (for children under the age of 17) annually.
Whether the recipients save the funds for future rainy days, use the money to supplement their take-home earnings, or purchase something they’ve had to go without for an entire year, these tax credits are very beneficial. For the many people who face poverty in the United States, SNAP, EITC, and CTC were put in place to help. It is up to Congress to keep the funding for each of these key programs in place as lawmakers continue to work to balance the federal budget. And it is up to us to remind Congress that they must not balance the budget on the backs of hungry and poor people.
Marsha Casey is a media relations intern at Bread for the World. She is a student at Montgomery College Takoma Park/Silver-Spring Campus.
From the soundproof room in our D.C. office, Bread experts update grassroots activists and answer questions. Pictured (l to r): LaVida Davis, director of organizing; Marion Jasin, organizing assistant; Eric Mitchell, director of government relations; Christine Melendez-Ashley, policy analyst. (Robin Stephenson)
By Robin Stephenson
"The fight is not over," said director of organizing LaVida Davis during the most recent Bread for the World national grassroots webinar and conference call. "The fiscal cliff is part of a longer conversation. [Members of Congress] still really need to hear from us.”
On the third Tuesday of each month, Davis and Bread's director of government relations, Eric Mitchell, along with other expert staff, gather around a phone to give you the most up-to-date information about our work and answer any questions you may have. The conference calls, which also have a webinar component, give our members direct access to our government relations staff. These are the members of Bread's staff who spend many of their afternoons in the offices of your members of Congress and know the ins and outs of the policy behind each of our campaign priorities.
At Bread, we know that every advocate accesses information differently, so we offer a variety of ways in which our grassroots can stay informed. When Congress is in session, we publish written legislative updates on this blog, we send out monthly newsletters, and, of course, our regional organizers are always available to help you plan local actions and answer your questions. The conference calls are yet another tool the you, as an advocate, can use to prepare for action.
During the most recent call, held on Tuesday, Jan. 15, one caller who identified herself as Joanne wanted to know how school lunches fared in the recent “fiscal cliff” bill passed by Congress on Jan. 1. Ready to answer her question on the other side of the phone was Bread’s domestic nutrition policy expert, Christine Melendez-Ashley. She told Joanne that the school lunch program was not affected and that the sequester (or automatic cuts) scheduled for March 1 would not impact the nutrition program either, because it is one of the programs exempt from these across the board cuts.
Melendez-Ashley said that if the sequester is not averted it will affect discretionary programs, including the Special Supplemental Nutrition Program for Women, Infants and Children (WIC) and poverty-focused development assistance (PFDA). Both of those programs are part of our 2012 Offering of Letters Campaign and are critically important to hungry and poor people.
She emphasized during the call that funding for WIC and PFDA is especially vulnerable because they are categorized as discretionary, meaning Congress must appropriate funds to pay for the program each year. Mandatory programs are not subject to across the board cuts—the spending levels for these programs are determined each year by the number of eligible participants.
The August 2011 Budget Control Act put spending caps on discretionary programs over 10 years and Congress must decide which programs will see decreased funding as they work through the appropriations process each year. The fiscal cliff bill further lowered those spending caps for the next two years as a way to delay the sequester. Sending Congress a message that these programs need a circle of protection is as critical now as it ever was.
Eric Mitchell cautioned that another perfect storm is brewing, and referred to the events coming down the pike as "March Madness." Between the debt ceiling (scheduled to hit between mid-February and March), the scheduled sequester (March 1), and the expiration of the 2013 continuing resolution (March 27), members of Congress have a lot of decisions to make in less than 60 days.
Mitchell said it is a good time to thank our members of Congress who voted for the fiscal cliff bill— if the bill had not been enacted, poor and hungry people would've suffered dire consequences. The bill extended refundable tax credits, including the Earned Income Tax Credit, for five years. Although the credits were not made permanent, this is a huge victory.
“Now through March 1 is critical," said Mitchell. “We urge you to also ask [members of Congress] not to politicize the debt ceiling debate. We want them to take a thoughtful, balanced approach that protects poor and hungry people.”To find out the next chapter of budget negotiations, ask tough questions of the experts, and hear how you can influence your policy makers to protect vital programs, call in to our next grassroots webinar and conference call on Feb 19. We will be waiting for you on the other side of the phone.
National grassroots conference calls and webinars are held on the third Tuesday of every month. These calls will take place at 4 p.m. and 8 p.m. EST (Please adjust time zones accordingly). To register, visit www.bread.org/events.
Photo by Flickr user 401(k) 2013
When Alexandria, Va., resident Ayana Edwards first learned that the Earned Income Tax Credit (EITC) and Child Tax Credit (CTC) could be in jeopardy during fiscal cliff negotiations in Congress, she prepared to face chaos.
Edwards, who works in human resources, knew that if those refundable tax
credits were reduced, the employees at her company who count on getting larger
tax refunds thanks to the EITC and CTC would flood her office, hoping she might
know of a way to offset the blow to their finances. She also kept close watch
on the negotiations because she is one of the roughly 27
million Americans who receives the EITC.
“I actually had a sit-down with a tax preparer who told me what the changes would be, and then, because I'm in HR, I’m familiar with any tax changes that could affect my employer and our employees, so I was watching it from both sides,” Edwards says.
The American Taxpayer Relief Act of 2012, better known as the deal that helped the country avoid the fiscal cliff, extended current benefit levels for both the EITC and CTC for five years. The extension preserved improvements made to the EITC and CTC over the last decade, including marriage penalty relief and expansion of income thresholds, which allows low-wage workers to count more of their earnings toward the credits. The EITC, which has been shown to encourage work and improve children's school performance, is a powerful tool in helping to lift families out of poverty—it is our nation’s largest anti-poverty program, in fact.
Edwards says the affect the EITC has had on her family has been tremendous.
She once utilized several federal safety net programs, but over the years she
has increased her earnings, through a series of progressively better-paying
jobs. She no longer qualifies for Temporary Assistance for Needy Families
(TANF) or SNAP (formerly food stamps)—EITC is one of the last benefits she
receives. If she continues on her current career trajectory, soon she’ll no
longer qualify for EITC, either. But, as it is now, the tax credit provides her
and her family with a very important hand-up.
“The EITC has been a huge help," Edwards says. "It’s practical and allows me to get money in one lump sum—money that I can use to catch up on bills, or make a major purchase, if I need to. I can get things like coats for the kids, if they’ve outgrown something. I have a larger family, so I’m not always able to replace all of the winter coats that no longer fit all at once. When I get my tax refund, which includes the EITC, that’s something I can do.”
This year, Edwards says she will likely use her EITC money to buy a used
car, since the vehicle she uses for her commute to work, 60 miles round-trip
each day, is old and she's nervous that it may soon break down beyond
repair. Edwards can see how, without the tax credit, she could easily
fall back into the poverty that she has escaped. Without a working
car, how would she get to work? Without a job, how would she pay her rent or
feed her family? She thinks that those who diminish the importance of the
credit, and think it should be reduced or eliminated altogether, just don't
understand it's role in helping millions of families secure food, clothing, and
“The only people who could say something against [EITC] are those who aren't in a position to need it, or don't care about those of us who really do need it," Edwards says.
[UPDATE, 11 p.m. The fiscal cliff bill has passed the House by a vote of 257 to 167 and is expected to be signed by the president soon. Thanks to all those who prayed and advocated for programs that help hungry people. While this is not a perfect deal, and does not fully address our long term fiscal outlook, it is an important first step. We believe that the revenues raised will help reduce the deficit and support initiatives that lift people out of poverty.]
By Eric MitchellYour calls over the past few weeks have been working. Senate leadership and the administration produced a deal that reduces the economic risk of the fiscal cliff and largely protects hungry and poor people.
The Senate overwhelmingly passed the deal 89-8, but its fate in the House is uncertain.
Specifically, the bill accomplishes the following:
- Extends the current Earned Income Tax Credit (EITC) and Child Tax Credit benefit levels for five years, including the 2009 improvements. This is something Bread for the World has been pushing for over the past three years and represents an enormous victory.
- Extends emergency unemployment benefits for one year, preventing 2 million people from losing unemployment benefits just one week after Christmas.
The deal postpones for two months the "sequester" (across-the-board cuts) that was mandated by the Budget Control Act last year. The sequester would cut some anti-poverty programs. Cuts to some international development programs would literally cost lives. But some of the biggest anti-poverty programs—including SNAP ( formerly food stamps), child nutrition programs, tax credits for poor working families, and Medicaid—are exempted from sequestration. Bread for the World will be working in the coming months on a more thoughtful approach to spending cuts and protecting poverty-focused international development assistance and WIC.
While this deal isn’t perfect, it will reduce the risk of recession and higher unemployment. It also includes important benefits to hungry and poor people.
Use our toll-free number (1-800-826-3688) to urge your members of Congress to pass the deal.
In these critical times, we also ask that you pray for the president and Congress. Pray that God will give them wisdom, a spirit of concord, and a shared sense of responsibility for hungry and poor people here and abroad.
Eric Mitchell is Bread for the World's director of government relations.
[While all eyes are focused on the fiscal cliff, we are pleased to inform you that the House has passed the Foreign Aid Transparency and Accountability Act of 2012. This bill helps to ensure that our foreign assistance efforts are more efficient and more effective in reaching our brothers and sisters abroad. The Senate also seems likely to pass it this week. We have been pushing for foreign assistance reform legislation for the past three years.]
By Eric Mitchell
Christmas is the time when we reflect on God's love and the birth of Jesus Christ. It is a time of hope and promise. As we celebrate this Christmas season with our friends and families, let us not forget that the Good News was first delivered to poor and humble people.
But this holiday season has a different tone for our congressional leaders, who are primarily focusing on the wealthy as they negotiate a deficit reduction package with the president that will prevent going over the fiscal cliff. What's at stake is our nation's ability to feed the hungry, care for the poor and less fortunate, heal the sick, and tend to the elderly. Now, more than ever, is the time for us to pray for our leaders and ask that they fight for hungry and poor people.
Our faith teaches us that we have a responsibility to the most poor and vulnerable people. We look at every budget proposal from the bottom up — how it treats those Jesus called "the least of these" (Matthew 25:45). Of all days, this is a time when Christians must bring that spirit to our political leaders struggling to agree.
A diverse group of Christian leaders have agreed on policy recommendations that will best accomplish this. You can amplify their message by sending a special holiday message to the members of Congress at the negotiating table, and ask them to create a circle of protection around programs for hungry and poor people.Eric Mitchell is Bread for the World's director of government relations.
Plan B would hurt families like Heather Rude-Turner's. Rude-Turner credits the Earned Income Tax Credit with helping her get back on her feet and allowing her family stay out of poverty. (Laura Elizabeth Pohl/Bread for the World)
[UPDATE, 8:30 p.m. The House did not take up the "Plan B" measure this evening as planned. The House adjourned and will return after Christmas.]
By Amelia Kegan
Are you frantically making final preparations for Christmas? So is the House of Representatives. The House is trying to take some action—any action—so its members can say they have done something in response to the impending fiscal cliff. But when we’re dealing with issues this important and this big, we shouldn’t be content with a half-baked proposal—especially one that would hurt low-income working families.
This evening, the House will vote on H. Res. 66, also known as “Plan B.” This bill would extend many of the 2001 and 2003 tax cuts for the first $1 million of income. But Plan B fails to address the real problem: the long-term deficit problem and the approaching fiscal cliff. The bill raises only $300 billion over ten years. That is a far cry from the $2 trillion in deficit reduction needed to put the country on a fiscally sustainable path. The resulting spending cuts required would devastate our country’s ability to address hunger and help people, both in the United States and abroad, move out of poverty. Under Plan B, even multi-millionaires would receive a tax cut. Only income earned above and beyond the first $1 million would be taxed at the 2000 tax rate of 39.6 percent. The Tax Policy Center estimates that Plan B would allow millionaires an average tax cut of over $100,000, compared to current law.
But the most disappointing part of this bill is what it would do to poor working families. Plan B ends the 2009 improvements to the Earned Income Tax Credit (EITC) and Child Tax Credit. These tax credits help more Americans escape poverty than any other anti-poverty program in the country. In 2011, the EITC and Child Tax Credit lifted 8.3 million people out of poverty. These credits reward work, promote economic mobility, and help struggling working parents put food on the table. A majority of EITC recipients only receive the credit for one or two years before moving to higher income levels. That is exactly what we want our anti-poverty programs to be doing. Why would we want to cut programs that are doing so much to help low-income working families move out of poverty and into the middle class?
But that is exactly what Plan B does. If enacted
- Over 13 million families, including 25 million children, would see their EITC and Child Tax Credit benefits reduced or eliminated.
- Nearly 3.75 million families, including almost 6 million children, would lose access to the Child Tax Credit entirely.
And this is just one of the bills the House will be voting on in response to the fiscal cliff. The other (H.R. 6684) includes drastic cuts to the Supplemental Nutrition Assistance Program (SNAP, formerly food stamps), cuts the Child Tax Credit further, and eliminates the Social Services Block Grant, which helps fund Meals on Wheels, services for seniors and children who are victims of abuse or neglect, and child care for low-income families.
Plan B isn’t an answer. It would harm millions of low-income families. Congress should stick with Plan A. They’ve been debating deficit reduction for the past two years at the expense of many other necessary priorities.
Christmas is a time of hope, promise, and togetherness. This is a moment when members of Congress should seek common ground and work together to solve our nation’s fiscal challenges while remembering that we have a responsibility to our most poor and vulnerable brothers and sisters. It’s time for Congress to set aside politics. Rather than voting on a proposal merely to say they’ve voted on something, Congress should do the work to negotiate a comprehensive, balanced, bipartisan plan that addresses our long-term deficits and prioritizes a commitment to ending hunger in the U.S. and around the world.
Amelia Kegan is Bread for the World's senior policy analyst.
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