Today’s Tax Day, Let’s Not Forget Lawmakers Axed NC’s EITC

Unless lawmakers reverse course, nearly one million North Carolina families will claim the state Earned Income Tax Credit (EITC) for the last time today, bringing pain to individual families and the state’s economy.

Last year, North Carolina lawmakers put an end to the tax credit and subsequently pursued deep tax cuts that primarily benefit the wealthy and profitable businesses. The result is a tax shift from high to low-income North Carolinians that ultimately makes the state’s tax code even more lopsided. It’s not too late to reverse course, however. State lawmakers should reinstate the EITC in May during the Short Session.

The EITC goes to families that work but earn low wages, and helps them keep more of what they earn so that they can support their children, get a foothold in the labor market, and avoid public assistance. Nearly 1.2 million Tarheel children, not just their parents, will feel the economic pain brought on by the loss of the state EITC. The federal EITC is widely recognized as one of the most effective tools for reducing poverty among children. On average, the federal EITC keeps 298,000 North Carolinians—half of whom were kids—out of poverty. North Carolina’s EITC builds on that success. Its loss could push families into poverty at a time when we already have the 10th highest poverty rate in the nation.

For young children, moving out of poverty is particularly important because poverty impacts the architecture of their developing brains. Research has found that lifting income in early childhood not only tends to improve a child’s immediate educational outcomes, but is associated with more schooling, attachment to the labor force, and higher earnings in adulthood.

For many Tarheel families, tax time is the only part of the year when parents find some smidgeon of relief from an economy of low-wages and a teeter-tottering tax code that demands they pay more. This is the time of year when many families can expect to catch up on bills and address unmet needs. Half of Tarheel families who qualify for the EITC get a refund as a way to offset the large amount of sales, gas, property, and other taxes they pay during all 12 months of the year.

Next year, however, it won’t be just economists who have to be worried about a tax-time surprise. Tarheel families in all 100 counties will be in for their own version of an April Surprise once they learn that the NC EITC is no more.

When it comes to being the first in flight for a manned aircraft, blazing the trail is a notable achievement in North Carolina’s history. However, being the first state to eliminate a state EITC in nearly 30 years, now that’s a different story. We should be supporting North Carolina’s lowest-paid workers, not further shifting the tax load onto their shoulders—especially during the weak economic recovery.

Written by Tazra Mitchell, Second VP of NCWU