BTC BRIEF: First in Flight from the EITC - Low-Income Working Families Bid Farewell to NC's Earned Income Tax Credit

By Tazra Mitchell
Policy Analyst, Budget & Tax Center
March 2014

Unless lawmakers reverse course, close to one million working families in North Carolina will claim the state Earned Income Tax Credit (EITC) for the last time this tax season, bringing pain to individual families and local economies. One year ago, North Carolina lawmakers put an end to the tax credit and subsequently pursued deep tax cuts that primarily benefit the wealthy and profitable businesses. The state EITC goes to families that work but earn low wages, and helps them keep more of what they earn so that they can stay in the workforce, support their children, and avoid poverty and public assistance.

The North Carolina EITC was a vital facet of the state’s tax system, building off of the federal tax credit—one of the nation’s most powerful anti-poverty tools for children. Combined with the income tax cuts, the loss of the state EITC is particularly backwards because the state’s tax system already asked more from low- and middle-income families than it did from those earning the most. The resulting tax shift is neither true tax reform nor good for North Carolina’s economy. It’s not too late to reverse course, however. State lawmakers can reinstate this proven policy tool during the Short Session of the legislative cycle that begins in May. If they do so, there would be no interruption to the ability of hardworking families to claim this modest but critical support during the next tax season.

Working families in each of the state’s 100 counties benefit from the state EITC. See the Appendix on page 3 for county-level data.

Read the brief and factsheet below.

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