Last week, we announced the formation of the Coalition for a Working Parents Tax Cut. The coalition consists of more than 80 groups and individuals, representing a broad cross-section of sectors, ideologies, and geographies, committed to the goal of providing more support to working parents with young children.
The coalition sent a letter to the governor, lieutenant governor, and every member of the state house and senate in support of a large refundable tax credit for working parents to help pay for basic necessities, especially the high cost of childcare. The proposed credit would go to households eligible for the federal Earned Income Tax Credit with children under six, and would be worth $5,000 for each child under three and $2,500 for each child between the ages of three and six.
The coalition notes in the letter that this kind of targeted refundable tax credit has several advantages over other efforts to support working households. The first is scale. Most social safety net programs reach only a small fraction of households in need. For example, the state’s childcare subsidy program reaches just 40,000 children in a given month, out of an estimated 250,000 children who are income-eligible. A refundable tax credit for working parents with young children would reach the vast majority of those 250,000 children.
The second advantage is ease of access. Safety-net programs are notoriously difficult to apply for, with applicants forced to navigate a web of bureaucracy in order to obtain aid. By contrast, to receive our proposed credit eligible applicants would simply need to file their taxes.
And the third advantage is flexibility. Most safety-net programs provide “in-kind” support – essentially vouchers to purchase a particular good: SNAP benefits for food, housing vouchers for housing, childcare subsidies for childcare. But these restricted benefits won’t always meet a family’s most pressing need; you can’t use SNAP benefits to pay the utility bill. The proposed tax credit would send cash to working households with young children, that they can put towards whatever makes the most sense for their family.
Senator Kristen McDonald Rivet and Representative Cynthia Neeley have introduced bills based on the proposal in the state senate and house respectively, and those bills can be found here (senate bill/house bill).
To view the letter and the list of current supporters, click here. If you’re interested in learning more, and adding your name to the list of supporters, go to risingincomeforall.org
