NEW REPORTS HIGHLIGHT REFUNDABLE TAX CREDITS AS TOOLS TO MITIGATE INEQUITIES IN TAX CODE
November 14, 2019Print
By: Juan Tirado
A new set of reports from The National Women’s Law Center explores the relationship between tax policy and gender and racial equity and urges policymakers to mitigate the structural inequities in the federal tax code, in part by improving refundable tax credits.
The three-part series, “Tax Justice is Gender Justice”, analyzes the outdated racial and gender biases in the federal tax code, examines policies that encourage inequity such as low taxes on corporations and the wealthy, and offers policy recommendations on how the tax code can be used as a tool to dismantle structural barriers.
The third report, “A Tax Code for The Rest of Us: A Framework & Recommendations for Advancing Gender & Racial Equity Through Tax Credits”, focuses on how policymakers can build on the success of programs like the Earned Income Tax Credit (EITC) and the refundable portion of the Child Tax Credit (CTC) to dismantle the structural barriers that impede economic security and wealth-building opportunities for women and people of color. Additionally, the report provides a policy framework for advancing equity through refundable tax credits. This framework assists policymakers in evaluating, designing, and strengthening programs like the EITC and CTC, while addressing their challenges and limitations. Utilizing this framework will allow them to leverage refundable tax credits to advance income, gender, racial, and/or other forms of equity.
The EITC and CTC have the most significant impact on low- and moderate-income families and keep more families out of poverty than any other federal program, excluding Social Security, according to report authors. Furthermore, these two refundable tax credits are associated with improved health and education outcomes and have been linked to an increase in earnings and hours worked.
The tax code is one of the most important tools to shape the economy, and while it is an overall progressive system, many of its aspects exclude low- and moderate-income families from wealth-building opportunities. These reports show that centering gender and racial equity when working towards a just tax code results in a stronger and healthier economy for everyone.