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Fostering Household Economic Vitality through the Earned Income Tax Credit (EITC)

EITC is an effective economic tool for ALICE households and other families working hard to make ends meet. According to the United Way ALICE Report for Louisiana, 40 percent of households struggle to make ends meet.

LAUW supports the expansion of the Earned Income Tax Credit. An increase in the state EITC match would partially offset the increased state tax for low-to-moderate income workers. 

These working tax credits are designed to help Louisiana farm workers, home health aides, teaching assistants, janitors, cashiers, and more continue to work and provide for their families. Research finds that during the 1990s, EITC expansions actually did more to raise employment among single mothers than welfare reform.

Louisiana’s EITC state match is set at 3.5 percent, which, according to the National Council on State Legislatures, is one of the lowest matches in the 26 states which currently offer a state EITC match.

Legislation to increase the state’s EITC match to 7 percent would help 531,000 Louisiana earners keep more of what they earn in order to make ends meet. These Louisiana families are led by more than 400,000 working moms, 186,000 working dads, and 38,000 military and veteran parents.  

EITC helps low-to-moderate income workers living in rural, suburban, and urban areas. Access to EITC translates into immediate spending, by qualified workers, often due to urgent and looming financial needs.  This economic activity also invests money back into local economies throughout Louisiana.  According to a survey conducted by LAUW and the Louisiana Budget Project at Volunteer Income Tax Assistance (VITA) sites during the 2016 tax season, most EITC recipients used the money saved to pay down accumulating bills, address housing or car repairs, cover education costs for children or the family wage-earner, and purchase other essentials, such as groceries and household goods. 

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