Tax Breaks Make an Impact on Fighting Poverty

Two recent reports demonstrate how tax breaks at the state and federal level can help reduce poverty.

The Institute on Taxation and Economic Policy has updated its report on State Tax Codes as Poverty Fighting Tools, which examines how refundable Earned Income Tax Credits, property tax breaks, targeted low-income tax credits and child-related tax credits are working in different states. While a number of states such as California, Maine, Massachusetts, New Jersey and Rhode Island have either introduced or expanded their EITC this year, some states have failed to pass EITC legislation.

Meanwhile, the advocacy group Citizens for Tax Justice used newly released Census Bureau data to argue in a separate report that the federal EITC and Child Tax Credit are effective anti-poverty programs that should be preserved and expanded.

“Together, these two tax credits (excluding the non-refundable part of the CTC) lifted 9.8 million people out of poverty, including 5.2 million children, in 2014,” said the report. “In fact, the EITC and CTC lift more people out of poverty than any other federal program aside from Social Security.”