The Earned Income Tax Credit (EITC) is one of the most effective anti-poverty programs currently in place in the United States. Maryland's General Assembly should act during this legislative session to expand the credit's proven benefits.
Throughout 2015, Sen. Elizabeth Warren and I worked on an initiative we called the "Middle Class Prosperity Project" to examine issues of concern to the middle class and those who aspire to it.
In December, as part of this project, we convened a forum with expert panelists including Kathryn Edin, a Johns Hopkins professor and co-author of "$2.00 a Day: Living on Almost Nothing in America," and Robert Greenstein, the head of the Center on Budget and Policy Priorities think tank (CBPP), to examine the EITC. These experts detailed how the EITC is now one of the most critical lifelines for Americans living in or at the edge of poverty.
Available only to families who are employed, the federal EITC supplements low-income wages and takes into account the number of children in a family.
At the federal level, the credit is modest. The maximum credit available in 2014 for a family with three or more children was just over $6,000, although most families received far less than that.
But even a modest credit can make a huge difference. Nationwide, CBPP has found that the federal EITC lifts approximately 6 million people out of poverty. More than 21 million additional Americans living in poverty depend on the EITC to ease the severity of their hardships.
In Maryland, approximately 420,000 people claimed the federal EITC in 2014, and the average amount received by each recipient was under $2,400.
Given the EITC's role in combating poverty, a broad body of research has found that the credit's benefits are wide ranging, including improving the health and educational performance of children living in families who receive an EITC.
Maryland is one of 26 states that have created a state EITC, which is pegged to the federal EITC, and which provides an additional boost to low-income residents of our state.
Because it is a tax credit calculated on the basis of each year's income, the EITC can kick in quickly to help a family deal with a sudden income loss.
Maryland's Department of Legislative Services conducted a mandatory evaluation of the EITC last year. They found that in the first four years after the financial crisis began in 2008, the low-income population in Maryland increased by more than 23 percent, while the number of EITC claimants rose by more than 14 percent, showing how responsive the EITC is to changes in a family's income.
Two years ago, the General Assembly adopted legislation that will increase Maryland's EITC from 25 percent to 28 percent of the federal EITC by 2018.
Following the recommendation of the Augustine Commission, a panel convened by the legislature that is currently studying Maryland tax issues, Gov. Larry Hogan has announced his support for accelerating the increase in the EITC to 28 percent immediately rather than in 2018. I applaud the governor's decision to support this measure and urge that it be adopted by the General Assembly.
However, Maryland should do much more to expand the reach of the EITC. Legislation introduced by Sen. Richard Madaleno and Del. Sheila Hixson would ensure that the EITC can help younger workers in our state who do not claim a dependent.
Currently, the EITC's benefits are reserved largely for households with children. The maximum amount of the EITC available to a single individual in 2014 was less than $500 — and it was not available to those under the age of 25.
The bill introduced by Senator Madaleno and Delegate Hixson would lower the eligibility age for Maryland's EITC to 18 so that it could help young adults establish a foothold for their future. Their bill would also increase the amount of income eligible for the credit and raise the state credit to 100 percent of the federal credit for single adults.
Adopting these measures would establish Maryland as a national leader in using this proven tool to help combat poverty.
Of course, an eligible Marylander can benefit from the EITC only if he or she claims the credit. Each year, many Maryland residents fail to benefit from this credit simply because they fail to claim it on their tax returns.
Tomorrow is National EITC Awareness Day, and I urge all Marylanders to see if they can claim the tax credit. Please also visit irs.treasury.gov/freetaxprep/ to find a Volunteer Income Tax Assistance Program that will prepare tax returns at no cost for those who qualify.
Rep. Elijah E. Cummings is a Democratic congressman from Baltimore. His email is Rep.Cummings@Mail.House.Gov.