When your paycheck doesn’t cut it

Arkansas legislators have an opportunity to improve the lives and health of working families by adopting our own state-level Earned Income Tax Credit (EITC). At tax time, the EITC gives a boost to working families with low-wage jobs who are struggling to pay bills. The benefits of credits like this extend far beyond the small cash bump to working families. Mothers who have increased access to EITCs have improved maternal health and their babies have better birth outcomes. On top of health benefits, kids whose parents have access to EITCs have better math and reading test scores and have higher earnings later on in life. The latest estimates from the Center on Budget and Policy Priorities show that a 5 percent EITC in Arkansas would cost just $40 million a year (a miniscule fraction of our $5 billion budget).

Tax Credits for Working Families just published a new video showing how the EITC helps workers save money at tax time: https://www.youtube.com/watch?v=5edFhmVbI6c&feature=youtu.be

An EITC would be especially helpful for Arkansas families. More Arkansans are finding jobs as we recover from the recession, but the wages being offered are often too low for families to make ends meet. The median wage in Arkansas (about $30,500) is also considerably lower than the national average (about $35,000 a year). Our wages are even low compared to our neighboring states with similar demographics and economies. We have been one or two dollars behind the regional average since the 1980s. If you take into account racial inequities, the job quality picture gets even worse. African-American workers in Arkansas make a median wage that is about $4 an hour (or $8,000 a year) less than white workers, and that gap has roughly prevailed for the past 20 years.

The good news is there is a straightforward way to help working families who are struggling with low wages. The EITC is a proven measure that rewards work and moves families out of poverty for good. One in four kids in our state grow up in poverty, and low-income Arkansans  were the only group left out of the 2015 tax cuts; it is time to join the 26 other states that have faced poverty head on with their own Earned Income Tax Credit (EITC). Read more about how the EITC would benefit Arkansas in our report and check out this moving interview with Professor Edin of the Bloomberg School of Public Health on how the EITC helps workers save money at tax time.