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Shirar Patterson is the president and CEO of the United Way of Eastern Maine. Courtney Yeager is the executive director of the United Way of Kennebec Valley. This column is written on behalf of the nine Maine United Ways.
The COVID-19 pandemic has dealt a devastating economic blow to our state. In April, Maine saw a 10.4 percent unemployment rate, compared with 3.1 percent that same time the previous year. Though the rate has declined, Department of Labor estimates place the monthly unemployment rate at more than twice that of the previous year. As the public health crisis continues, for many people temporary furloughs and reductions in hours are turning into permanent job losses and pay cuts that disproportionately affect low-wage workers.
Although the initial federal response helped prevent a sharp rise in poverty despite huge job losses, we are concerned that as support dwindles or expires, poverty and the hardship that goes with it will rise exponentially in Maine. Increasing financial stability through the tax code can ensure that low-wage workers are not left behind once temporary relief programs end.
Two of the nation’s most powerful anti-poverty programs are the Child Tax Credit (CTC) and Earned Income Tax Credit (EITC). Expanding these two credits for tax year 2020 would deliver well-timed economic stimulus to thousands of low-income Maine households when they file their taxes in early 2021.
Expanding these tax credits, which have earned broad bipartisan support, would help workers keep more of what they earn to pay for things like reliable transportation to get to work, groceries for their families, and childcare. These credits improve financial stability, work to address racial and gender inequities to economic mobility and are critical to our state’s ability to fully recover and rebuild.
United Ways in Maine have seen firsthand the power of these tax credits to change people’s lives, by offering free volunteer income tax assistance and education about reducing debt and building savings, as part of a statewide coalition of partners: CA$H (Creating Assets, Savings & Hope).
Consider the example of Lisa. After the sudden loss of her husband in an auto accident, Lisa became the sole financial provider for herself and her two teenage boys. When it came time to file her taxes, she visited the Western Maine CA$H Coalition’s free tax preparation program. In addition to saving the $200 filing fee, volunteer tax preparers helped Lisa identify thousands of dollars in tax credits for which she was eligible. At a time of uncertainty and immense challenge, the Earned Income Tax Credit and the Child Tax Credit were able to provide an extra layer of security to Lisa and her family.
Specifically, we encourage expanding the EITC age range for eligible workers from 25-64 to 21-67 and increasing the size of the credit for low-wage workers not raising children at home. This expansion would boost the economy and help thousands of Mainers while encouraging and rewarding people who work.
We encourage helping the lowest-income parents by making the Child Tax Credit of $2,000 per child fully refundable for tax year 2020 for families who currently receive a partial tax credit or no credit at all because their families’ earnings are too low. CTC reduces poverty while investing in our most precious community assets — our children. At a time when family budgets are under great stress and many parents have stopped working to care for their children, enlarging this credit would offer much-needed relief.
Finally, policymakers should allow filers to use their income from either 2019 or 2020 when calculating their 2020 EITC and CTC. When the economy weakens, many single-earner families who lose their jobs or a portion of their work hours face an additional hit because they lose part or all their EITC and CTC as well. Policymakers have provided this “look-back” option in the past for families affected by various natural disasters. For instance, anyone who lived in a presidentially declared disaster zone during tax year 2018, 2019, or early 2020 could use either their current or previous year’s income to file for their EITC and CTC. We request the same opportunity for filers suffering through this disaster — the COVID-19 pandemic.
United Ways in Maine support the expansion of these tax credits for Mainers and believe they are vital to our state’s recovery through the pandemic and beyond. For more information on EITC, CTC, and Maine United Ways visit, cashmaine.org.