2010 Campaign Laser Talk: The EITC

The Earned Income Tax Credit Helps People Out of Poverty!

An economic recovery that results in greater poverty for Americans is not a recovery. The safety net for impoverished Americans, which in times like this can be any of us, must be made stronger.

The Earned Income Tax Credit or EITC has lifted more Americans out of poverty than any other program.

The EITC began in 1975 to reward work for people in low-paying jobs. Here’s how it works — imagine a low-income single mom with two children. Because she is low-income, she can get an Earned Income Tax Credit based on a percentage of her income. The size of her credit is based on 3 things: how much money she earns, her marital status and her family size. Because she is low-income, as she earns more money, her credit increases. She’ll reach the maximum credit for a single mom with two kids when she earns just over $12,500. Then, at around $16,000 of income, her EITC will start to decrease and completely disappear when she earns around $40,000.

 Now the key to the EITC is that it is fully refundable. Remember, a tax credit reduces your tax bill so if you don’t owe any income taxes, like most families making less than $45,000 per year, a tax credit does you no good — unless it’s refundable. A refundable credit allows you to still get a refund even if you don’t owe income taxes. So, if our single mom earned $10,000 in 2009, she will still get a refund of $5,028 from the IRS even though she doesn’t earn enough money to pay income tax. That’s more than half of her annual income. Imagine how much that helps her family finances and it’s easy to see why the EITC lifted 6.6 million people out of poverty last year, half of them children.

But the EITC still needs improvement. The credit for single workers without children, who are some of the poorest of the poor, is only $457, less than one-tenth the credit for a family of four. Also, recent enhancements to the EITC for married couples and larger families will expire at the end of this year.

Poverty is on the rise and economists predict one out of every four children will be in poverty through 2010. Credits like the EITC are critical to helping low-income Americans stay afloat. We must work to strengthen and expand these credits so that low-income people in the U.S. can share in the economic recovery.

What Is a Laser Talk?

A laser talk serves as a useful starting point for your advocacy work, whether as a talking points during a town hall meeting or as a primer for face-to-face meetings with candidates and elected officials. Follow up with more information and evidence supporting your points. And of course, adapt a laser talk to reflect your own experiences and why you care about the issue! For more on how to create your own laser talk, see the RESULTS Activist Toolkit: Create and Deliver Your EPIC Laser Talk and our Health Care for All campaign page.