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Expansions of the Earned Income Tax Credit and Child Tax Credit Would Benefit 8 Million Black 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 8 million Black 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 Black poverty rate from 21 percent to 17 percent, an 18-percent reduction.
  • Lower the overall child poverty rate from 15 percent to 11 percent, a 28-percent reduction.
  • And shrink the Black child poverty rate from 23 percent to 15 percent, a 33-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 Black, while its Child Tax Credit changes would benefit more than 42 million children under age 17 — including 7 million Black children.

Black Households Benefiting from the Working Families Tax Relief Act, by State
State Number of Black Households
Total U.S. 8,263,000
Alabama 288,000
Alaska 5,100
Arizona 60,000
Arkansas 108,000
California 399,000
Colorado 45,000
Connecticut 67,000
Delaware 36,000
Dist. of Columbia 54,000
Florida 690,000
Georgia 661,000
Hawaii 5,300
Idaho 2,000
Illinois 354,000
Indiana 137,000
Iowa 27,000
Kansas 40,000
Kentucky 87,000
Louisiana 341,000
Maine 3,000
Maryland 292,000
Massachusetts 87,000
Michigan 300,000
Minnesota 78,000
Mississippi 258,000
Missouri 158,000
Montana 800
Nebraska 21,000
Nevada 55,000
New Hampshire 3,100
New Jersey 208,000
New Mexico 8,000
New York 513,000
North Carolina 472,000
North Dakota 4,300
Ohio 329,000
Oklahoma 67,000
Oregon 16,000
Pennsylvania 271,000
Rhode Island 11,000
South Carolina 305,000
South Dakota 3,100
Tennessee 248,000
Texas 668,000
Utah 6,100
Vermont 1,000
Virginia 313,000
Washington 54,000
West Virginia 17,000
Wisconsin 83,000
Wyoming 800

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

UPDATED
September 17, 2019