The Earned Income Tax Credit helps low-income working families make ends meet by letting them keep more of the money they earn. But each year more than 1 in 5 eligible tax filers in Louisiana don’t claim the credit. With so many Louisiana households struggling due to the coronavirus pandemic, it is important that our state officials do everything in their power to help households receive it if they are eligible. In a letter to The Times-Picayune | Baton Rouge Advocate, LBP’s Neva Butkus explains that millions of additional dollars could flow into families’ wallets and local economies if state and local governments do more to promote this important benefit:
To claim the credit, tax filers must have children and a job that pays no more than $41,000 to $56,000 annually, depending on their household size and marital status. The vast majority of the credit falls to families that make much less than the maximum amount. This year, with so many households’ incomes falling due to the recession, more working families who have been laid off or seen their hours reduced may qualify for the credit. When more eligible families claim the EITC, the whole economy sees the benefits. People who get the credit tend to spend the money on basic needs – clothes and groceries, restaurants or car repairs – and in their local communities, supporting local jobs.
Strong safety nets reduce racial inequity
Systemic racism, past and present, has put significant barriers to economic mobility in front of households of color, leaving Black and brown communities disproportionately below or near the poverty line. Advocates have pushed for stronger economic security and safety net programs to ensure low-income households can cover basic necessities like food, housing and healthcare. Research shows that when these programs are strong, they are particularly good at reducing poverty. In particular, government programs have had a key role to play in reducing economic inequities between Black and Latino households and their white counterparts. Danilo Trisi and Matt Saenz of the Center on Budget and Policy Priorities have more:
Between 1970 and 2017 the [supplemental] poverty rate fell for all groups, but it fell even more for Black and Latino people: by 25 and 27 percentage points, respectively, compared to 8 percentage points for white non-Latino people, we calculate. Even with this reduction, poverty rates for Black and Latino people remained far above the white poverty rate. Our series begins in 1970, the first year that data on Latino ethnicity are available, and ends in 2017, the latest year that data on underreporting of key government benefits are available.
The average minimum wage worker is 35 years old
Here are the cold, hard facts about who makes a minimum wage in this country: The average earner is 35 years old; 28% of them have children; more than half of them work full-time; 59% of them are women, and 43% of them have college experience. While business lobbyists may argue that the minimum wage is a “training wage” or portray minimum wage earners as high school students making extra cash after school, this does not reflect the reality of our workers or our economy. Jim Beam with the American Press reviews the arguments over a wage increase:
The U.S. Bureau of Labor Statistics, according to The Advocate, shows that just under half of workers — 48.7 percent — make less than $15 per hour. The Economic Policy Institute (EPI) said the proposed $15 per hour increase would lift the wages of 32 million workers, the majority of whom work in essential and frontline industries. EPI said raising the minimum wage helps narrow the racial and gender gap since 23 percent of workers who would benefit are Black or Latina women. The federal minimum wage has been at $7.25 since 2009 — the longest it has been unchanged since the minimum wage was established in 1938. When President Franklin D. Roosevelt signed the first bill it was 25 cents per hour. Adjusted for inflation, that would be worth about $4.45 per hour today.
It’s time to pay people a living wage.
Drug prices in America
New research comparing prescription drug prices by country found that on average, U.S. prices were 256% higher than other nations. The United States also spends more per capita on prescription drugs than any other nation in the Organisation for Economic Co-Operation and Development (OECD). More from the Rand Corporation:
The findings indicate that 2018 drug prices in the United States were substantially higher than those in each of 32 comparison countries when considering all drugs together. Compared with all comparison countries combined, U.S. prices were 256 percent of those in other countries. Prices remained substantially higher than prices in other countries—but with a smaller difference than in our main results—when we adjusted U.S. prices downward based on published estimates of the relative differences between manufacturer and net prices for drugs. U.S. prices for most subsets of drugs, and particularly brand-name originator drugs, were higher than those in comparison countries. The one exception was unbranded generic drugs, for which U.S. prices were on average 84 percent of those in other countries.
Number of the Day
78% – The percentage of eligible EITC recipients who actually claim the credit in Louisiana. Unclaimed EITC benefits leave millions of dollars for families on the table each year in our state. (Source: Internal Revenue Service)