EDUCATE - Earned Income Tax Credit

Increasing North Carolina’s Earned Income Tax Credit to 5% of the federal credit is smart, targeted, and inexpensive investment that will put more money into the hands of North Carolina’s low-income working families who need the most help.

Weakening economic conditions are having a magnified impact on North Carolina’s low-and moderate-income families, who were already working hard to make ends meet. Stagnant wages, rapid growth in the low-wage labor market, and rising costs of necessities like gas, food, health care and housing, are squeezing low-income households and threatening the economic well-being of hundreds of thousands of North Carolina families – and their children.

In 2007, state lawmakers adopted a refundable version of the federal EITC worth 3.5% of the federal credit.

• This year, an estimated 845,000 working households (1 in 5 North Carolina households) will be eligible to benefit from the new credit.

• As it currently stands, around $48 million will circulate to households in all 100 counties, and the average household benefit will be $56. The average benefit of a 5% state EITC would be $80.

• Almost all of the money the state invests in working families through an increased state EITC will flow directly to North Carolina’s cities and towns as these families spend the additional income on basic necessities in their local economies.

• Increasing the state EITC to 5% would be a relatively inexpensive ($20.6m) and targeted investment that would help North Carolina's working families who are suffering the most from the current economic downturn.

(Thanks to our friends at the NC Justice Center for the information in this alert)