New Report Lifts Up EITC as a Critical Policy to Combat Racial Inequity

A new report encourages states to enact and strengthen state-level Earned Income Tax Credits (EITC) to create an anti-racist policy response to the COVID-19 pandemic.

The Center on Budget and Policy Priorities’ (CBPP) new report, “3 Principles for an Anti-Racist, Equitable State Response to COVID-19 – and a Stronger Recovery,” outlines how states can actively use policies to dismantle the country’s legacy of racial discrimination. The report outlines three principles that should guide state policymakers in creating equitable policy solutions, such as targeting aid to those most in need due to COVID-19 and consequent economic crises; advancing anti-racist and equitable policies that dismantle persistent racial, gender, and economic inequities; and protecting state finances to preserve the foundations of long-term economic growth and opportunity. CBPP argues that due to America’s history of racism, all policies must take race into account and actively work to dismantle racism embedded in the social, economic, and political systems.

The report offers several anti-racist state policy recommendations, including the EITC.  Tax policy experts have pointed to the EITC as a staple in all equitable state tax systems because the credit offsets regressive tax measures like sales taxes.  The report recommends that states with existing credits increase the value to put more money in the pockets of workers and make the credits more inclusive by extending them to immigrant workers filing with Individual Taxpayer Identification Numbers.

There is a growing body of research supporting the EITC’s effectiveness for combating racial inequality, particularly among women of color. According to the CBPP, the federal EITC benefits 9 million women of color. In 2019, the National Women’s Law Center highlighted the EITC and the Child Tax Credit as critical policies to combat gender and racial equity in their report series, “Tax Justice is Gender Justice.” This research is critical now as lawmakers at the federal and state level determine how best to support black communities and other communities of color, who are being hit the hardest by COVID-19.

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