The government programs that comprise America’s social safety net have had a profound effect on working families and the unemployed, particularly throughout the Great Recession and the slow economic recovery that has followed. But tax credits, which often go overlooked in discussions on how to prevent poverty, also have a huge impact on working families.
Many working families are now being led by single mothers or women who are primary breadwinners, and according to an analysis from the Center on Budget and Policy Priorities, two primary tax credits are responsible for keeping millions of women and girls out of poverty each year. The Earned Income Tax Credit (EITC), which benefits low-income workers, kept an estimated 3.4 million women above the poverty line in 2010. Add in the Child Tax Credit (CTC), and the number of women who avoided poverty swells to nearly 5 million, CBPP found:
The numbers rise when you include a second federal income tax credit — the less well-known CTC, which provides up to $1,000 per child for working families: together, the CTC and EITC kept 4.9 million women and girls above the poverty line in 2010, including more than 800,000 just by the Recovery Act’s expansions of both credits.
As CBPP’s Arloc Sherman noted, research shows that the EITC continues to help women even after they retire. According to the Congressional Budget Office, the EITC helps boost Social Security retirement benefits for women, since those benefits are based on prior income history.
Unfortunately, the newly-adopted House GOP budget could end many tax breaks in order to finance a massive tax cut for the rich, though Budget Committee Chairman Paul Ryan (R-WI) refuses to say which breaks would be eliminated. If the GOP and Ryan continue their history of targeting programs that benefit the poor to pay for tax breaks for the rich, however, beneficial tax credits like the EITC and CTC could be at risk.