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EITC Awareness Day: The Value of Hard Work January 30
In a low-income budget, food is often the most flexible item. Rent, transportation, child care, utilities—these are fixed expenses.
So food is one place a struggling family cuts corners.
President Obama and others have set a goal of ending childhood hunger in the United States by 2015. One component needed to achieve this goal is strong child nutrition programs, like the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) and the school meal programs.
But progress against hunger requires broader efforts to reduce poverty. Food assistance to hungry people is vital, but it is not enough.
Causes of Hunger
The causes of child hunger in the United States are rooted in poverty.
Parents earning low wages struggle to make ends meet and feed their children. Low-income families live on the edge of a financial precipice. If the car breaks down, a child gets sick, the furnace goes on the blink, or a parent is laid off from her job, a low-income family is in trouble. Any one of these things could mean the difference between having enough food on the table and not.
Poverty forces drastic choices, like watering down a baby’s formula to make it last longer.
In 2010, Bread for the World members successfully urged Congress to adopt changes to U.S. tax policy that benefit low-income families.
How Tax Policies Help End Hunger
Taxes are often near the top of the agenda in Congress. In the midst of the debate over which taxes to change and which to renew, the needs of low-income people could easily be lost. Bread's 2010 Offering of Letters asked Congress to protect and strengthen key tax credits that can make a big difference for low-income workers and their families. Our Offering of Letters was a success, and in December of 2010, Congress passed a bill that extended tax credits for low income families through 2012. Now, Bread for the World's 2012 Offering of Letters will also ask Congress to continue to protect these critical tax credits.
The Earned Income Tax Credit (EITC) was established in 1975 to help families keep more of their earnings. The EITC lifts more children above the poverty line than any other government program, according to the Brookings Institution. In 2011, more than 26 million households applied for the EITC and received an average of $2,240. As a result, an estimated 6.6 million people, including 3.3 million children, were lifted above the poverty line.
The EITC could help more low-income families:
- The size of the tax credit does not increase for families with more than three children even though their poverty rates are higher.
- Filing for the EITC is complicated so most eligible families use commercial tax preparation services. This means EITC filers pay hundreds of dollars every year unecessarily—money needed to support their families.
- Tax filers can lose part of their refund by taking "Refund Anticipation Loans"—short-term, high-interest loans based on the tax filer’s expected refund—because their immediate needs are so pressing.
Another credit, the Child Tax Credit (CTC), is worth up to $1,000 for each child under age 17 claimed on a worker’s tax return. The refundable portion of the credit, which primarily goes to low-income households, provides close to $20 billion to families with children every year. In December 2010, Congress extended a law allowing families making as little as $3,000 a year to receive the credit. If the CTC improvements hadn't been extended, 6 million kids would have lost their credit, and 10 million kids would have seen a smaller credit.
What Bread is Doing
The 2012 Offering of Letters helps policy makers understand that ending childhood hunger requires a broad array of policies that address poverty and strengthen nutrition programs aimed at low-income children and their families.
The ultimate goal? Fewer families—fewer children—will go to bed hungry each night.
Get updates on issues and actions to take on behalf of hungry people.