BEYOND THE NUMBERS
Expanding Family Tax Credits Would Boost Incomes of Millions of Latino Households
Latino communities across America come together between mid-September and mid-October to celebrate their diverse cultures and share their traditions. But Hispanic Heritage Month also offers a chance to recognize that expanding the Earned Income Tax Credit (EITC) and Child Tax Credit could benefit millions of Latino families nationwide. (See chart note for more on the definitions of Latino and Hispanic.)
In 2019, the EITC and Child Tax Credit will boost the incomes of 10 million Latino households, which disproportionately benefit from the tax credits, as we’ve explained. Still, the credits could do more. Several legislative proposals would make the EITC or Child Tax Credit more effective, including the Working Families Tax Relief Act; the American Family Act from Rep. Rosa DeLauro and Senator Michael Bennet; and the House Ways and Means-passed Economic Mobility Act. For example, the Working Families Tax Relief Act’s EITC and Child Tax Credit expansions would boost the economic well-being of more than 9 million Latino households.
Stronger income assistance — such as from these credits — is linked with a series of gains for children, research has repeatedly shown — healthier birth weights, better childhood nutrition, higher school enrollment, higher test scores, higher high school graduation rates, and higher rates of college entry.
The Working Families Tax Relief Act — introduced by Senators Sherrod Brown, Michael Bennet, Dick Durbin, and Ron Wyden and 42 co-sponsors in the Senate and by Reps. Dan Kildee and Dwight Evans in the House — would make the Child Tax Credit fully refundable so children in the poorest households would receive the full credit, and it would create a larger, fully refundable Young Child Tax Credit for children under age 6. It would also increase the EITC for families with children by roughly 25 percent.
About 5 million Latino families with children would benefit from the bill’s EITC and Child Tax Credit expansion. For a Latina mother of a 4-year-old and a 7-year-old who makes $20,000 as a home health aide, for example, the bill would raise her Child Tax Credit by $2,210 and her EITC by about $1,460, for a combined gain of about $3,670.
The bill also would substantially increase the EITC for Latino workers who aren’t raising dependent children. It would raise the maximum EITC for working childless adults — the lone group that the federal tax code now taxes into, or deeper into, poverty — from roughly $530 to $2,100 and raise the income limit to qualify for the credit from about $16,000 for a single individual to about $25,000. It would also expand the age range of eligibility for the tax credit from 25-64 to 19-67. Under this bill, after-tax incomes would rise for about 4 million Latino working childless households.
Latinos face a poverty rate of 22 percent (which is over 50 percent higher than the national poverty rate) under the Supplemental Poverty Measure — a more comprehensive metric than the official poverty measure, which counts only cash income. The higher Latino poverty rate reflects a variety of factors, including a history of discrimination in hiring, pay, and housing, and underinvestment in these communities. The bill would have significant anti-poverty impacts. It would lift about 2 million Latinos out of poverty, including 1 million children, and lift another 8 million Latinos, including 3 million children, closer to the poverty line. Ultimately, the bill would reduce the Latino poverty rate by about one-fifth.
The community of nearly 60 million Latino and Hispanic people who live in the United States includes numerous subgroups. Among those whom the bill would benefit: nearly 6 million Mexican Americans, 927,000 Puerto Ricans, and 378,700 Salvadoran Americans (see table).
The Economic Mobility Act also contains some of these provisions, though on a temporary basis; it would expand the EITC for childless workers and enlarge the Child Tax Credit, including making it fully refundable, for the next two years. The American Family Act would also establish a fully refundable Child Tax Credit and increase it by $1,600 for children under age 6 and by $1,000 for older children.
|Latino Households Benefiting From Working Families Tax Relief Act, by Subgroup|
|Subgroup||Number of Households|
|Other Central American||5,500|
|Other South American||2,700|
|All Other Hispanic/Latino/Spanish||290,800|
|Brazilian** (not included in totals above)||57,400|
* This figure reflects Puerto Ricans living on the mainland and does not include those living in Puerto Rico. See “Working Families Tax Relief Act Would Help Puerto Rico Families” for a discussion on how the bill would benefit Puerto Rico.
** This figure represents the 96 percent of Brazilian households who are not categorized as “of Hispanic, Latino, or Spanish origin” in American Community Survey data; the 4 percent of Brazilian households who are categorized as such (2,600) fall throughout the other nationalities and are included in “Total Latino.”
Note: “Latino” generally refers to people whose origins are geographically located in Latin America; while “Hispanic” is not tied to geography but rather refers to those who have Spanish-speaking origins. Census surveys ask respondents to both self-identify as “of Hispanic, Latino, or Spanish origin” (this is asked in a single question); and to identify where they or their ancestors were born. The total number of Latino households in this table is estimated using the responses to the first question alone, and does not include a number of people who trace their origins to countries in Latin America yet do not self-identify as being “of Hispanic, Latino, or Spanish origin.” Most notably, the vast majority of census survey respondents who identify that they or their ancestors were born in Brazil do not self-identify as being “of Hispanic, Latino, or Spanish origin” in the census data, even though Brazil is part of Latin America. This choice may be because those who trace their ancestry to Brazil, a predominantly Portuguese-speaking country, do not identify as Hispanic (i.e., Spanish-speaking) and the Census question presents the terms Latino and Hispanic together in the same question. In this table, we separately show the number of people who trace their origins to Brazil and would benefit from the Working Families Tax Relief Act but don’t identify as “of Hispanic, Latino, or Spanish origin.” Much smaller numbers of people who trace their origins to other Latin American countries such as Belize (which is also not predominantly Spanish-speaking) but do not self-identify as Latino, would also benefit from the Working Families Tax Relief Act.
Source: CBPP estimates based on 2015-2017 American Community Survey data and March 2018 Current Population Survey data
- El crédito tributario por hijos
- Federal Payroll Taxes
- Federal Tax Expenditures
- Fiscal Stimulus
- Marginal and Average Tax Rates
- Tax Exemptions, Deductions, and Credits
- The Child Tax Credit
- The Earned Income Tax Credit
- The Federal Estate Tax
- Where Do Federal Tax Revenues Come From?
- Where Do Our Federal Tax Dollars Go?