There’s a lot of press and debate lately about minimum wage, livable wage, and income inequality. While those policy discussions evolve, there’s a simple, proven boost we can give to the women and men working hard, yet can barely make ends meet.
The federal Earned Income Tax Credit (EITC) is a longstanding tool to incent work over government benefits, and effectively increase annual incomes for working people. With our partners, United Way of Anchorage helped thousands of our neighbors access the EITC and other credits through MyFreeTaxes.com and free tax preparation sites in Anchorage. Last year alone, 5,400 were helped, resulting in $6 million coming back to our community.
All good, right; but there’s a hitch: Right now, the EITC applies mostly to families raising children. Even noncustodial parents who want to provide more support to their children receive very little from the credit. Struggling single workers, particularly young childless workers aged 21-24, are ineligible for the EITC.
This has a big impact in Anchorage for two reasons. First, in the last decade, wages have lagged far behind the cost of living, and job growth has been heavily weighted to the typically lower wage service sector.
Second, our demographics have changed considerably. Significantly less households contain children, and our fastest growing age groups are young, single adults and folks over 55.
Young people gaining a foothold in the workforce, people trying to save for retirement, and all of those in between who struggle to make ends meet would greatly benefit if the EITC included them.
Expanding the EITC to include workers not raising children would give 38,000 working people in Alaska the financial stability to cover the basics, build a better future for themselves and their loved ones, and contribute more to our local economy. Studies show that the EITC helps working people buy necessities like food and gas from local businesses, which in turn helps our local economy grow.
These hard working people—young and old, male and female, from every background—perform essential services in schools and hospitals, on construction sites, and in the businesses and services we rely on every day.
Bipartisan proposals are pending in Congress to improve the EITC for workers not raising children by lowering the eligibility age to 21 and increasing the maximum credit amount. We count on all of these workers to keep Alaska running. Now it’s time to recognize their hard work and expand the Earned Income Tax Credit.