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Expansions of the Earned Income Tax Credit and Child Tax Credit Would Benefit 9 Million Latino Households

The Earned Income Tax Credit (EITC) and Child Tax Credit go to millions of low- and moderate-income working families each year. Studies show that the EITC increases employment, raises incomes, and reduces poverty. Research also links income from these tax credits to a series of gains for children — better infant health, improved school performance, higher college enrollment, and increases in earnings in adulthood. As a result, the tax credits appear to reduce poverty not only in the near term but also in the next generation.

A number of legislative proposals would make the EITC or the Child Tax Credit — including its refundable component — more effective. For example, the Working Families Tax Relief Act — introduced by Senators Sherrod Brown, Michael Bennet, Richard Durbin, and Ron Wyden and 42 co-sponsors in the Senate and by Representatives Dan Kildee and Dwight Evans in the House — would both make the Child Tax Credit fully refundable (so it reaches children in the poorest families) and boost the EITC. That legislation would:

  • Boost the incomes of an estimated 46 million households — including 9 million Latino households.
  • Substantially expand both the EITC for families with children and the EITC for workers not raising a child at home. The expansions include broadening the age range of workers eligible for the credit from 25-64 today to 19-67, a provision that would support young workers, especially those who lack a college degree.

The Working Families Tax Relief Act would have large effects on poverty. It would:

  • Reduce the overall poverty rate (using the Supplemental Poverty Measure, which analysts favor) from 14 percent to 12 percent — a 15-percent reduction.
  • Reduce the Latino poverty rate from 22 percent to 18 percent, a 20-percent reduction.
  • Lower the overall child poverty rate from 15 percent to 11 percent, a 28-percent reduction.
  • And shrink the Latino child poverty rate from 24 percent to 18 percent, a 27-percent reduction.

A related bill from the House Ways and Means Committee — 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. Its expansion of the EITC would raise the after-tax incomes of 16 million childless adults, of whom about 3 million are Latino, while its Child Tax Credit changes would benefit more than 42 million children under age 17 — including 12 million Latino children.

Latino Households Benefiting from the Working Families Tax Relief Act, by State
State Number of Latino Households
Total U.S. 9,271,000
Alabama 30,000
Alaska 8,200
Arizona 371,000
Arkansas 36,000
California 2,495,000
Colorado 184,000
Connecticut 93,000
Delaware 15,000
Dist. of Columbia 9,500
Florida 845,000
Georgia 149,000
Hawaii 25,000
Idaho 35,000
Illinois 330,000
Indiana 69,000
Iowa 29,000
Kansas 53,000
Kentucky 23,000
Louisiana 35,000
Maine 2,300
Maryland 82,000
Massachusetts 140,000
Michigan 78,000
Minnesota 49,000
Mississippi 13,000
Missouri 39,000
Montana 5,500
Nebraska 32,000
Nevada 132,000
New Hampshire 5,500
New Jersey 282,000
New Mexico 163,000
New York 609,000
North Carolina 151,000
North Dakota 4,900
Ohio 70,000
Oklahoma 64,000
Oregon 84,000
Pennsylvania 161,000
Rhode Island 28,000
South Carolina 42,000
South Dakota 5,800
Tennessee 53,000
Texas 1,752,000
Utah 63,000
Vermont 1,100
Virginia 109,000
Washington 142,000
West Virginia 3,900
Wisconsin 62,000
Wyoming 8,800

Source: CBPP estimates based on 2015-2017 American Community Survey data and March 2018 Current Population Survey data.