The Poverty Rate Went Down Last Year, but Expanding the EITC Could Help those Who Missed Out
September 16, 2016Print
By Kate Skochdopole
This week, the U.S. Census Bureau released its annual income and poverty data, which showed the official poverty rate dropped 1.2 percentage points in 2015 to 13.5 percent – the most dramatic decrease since 1968. Although the data signaled overall progress in the war on poverty, it also showed that vulnerable populations, including rural families and households of color, continue to struggle.
Tax credits such as the Earned Income Tax Credit (EITC) and Additional Child Tax Credit played a critical role in lowering the poverty rate, bringing 9.2 million Americans, including 4.8 million children, above the poverty line. Expanding the EITC could give millions more low-income taxpayers the leg up they need to find financial security.
Outside of major metropolitan areas, median income barely budged. The EITC is particularly important to rural families, who live in communities with typically lower average incomes and higher poverty rates than urban areas. Since the EITC puts money back into local economies—some estimate that for every dollar spent on the EITC, $1.50 goes back to local economies—the credit not only helps individual families, but can lift up entire communities.
And despite a major decline in the number of poor Americans as a whole, nearly one in five children and one-quarter (24 percent) of African Americans are still living in poverty. Expanding the EITC could make a major difference for this demographic.
To reduce the poverty rate among workers and families of color, particularly young African American men, lawmakers could expand the credit for workers not raising children, a proposal that’s received bipartisan support from the likes of President Obama and House Speaker Paul Ryan (R-Wisc.). Workers without children are the lone group consistently taxed into poverty, and expanding the amount of EITC they can receive would help about 7.5 million more Americans make ends meet.