EITC aid boosts isle families, economy
A report by the Hawaiʻi Budget & Policy Center on the EITC shows that the positive impacts of the credit start before birth and extend through life. Pregnant women who benefit from EITC are more likely to receive early, regular prenatal care. These mothers have fewer low-birthweight babies, which in turn reduces the number of children with disabilities and their associated health care costs. A $1,000 increase in the EITC reduced the rate of low-birthweight babies by 2–3 percent.
Children in EITC households are more likely to graduate from high school and college. For children between the ages of 13 and 18, a $1,000 increase in the EITC received by their household raises their likelihood of completing high school by 1.3 percent and college by 4.2 percent. It also boosts their career earnings by 2.2 percent.
It’s a policy that works for the families that receive it, and it’s a policy that works for our economy. The state EITC benefits employers because workers who can pay for necessities are more dependable employees than those who struggle financially. Workers can spend the credit on child care for their kids and reliable transportation and gas to get to work. Additionally, as families spend the money they receive from the EITC to pay bills, feed their children, and purchase gas to get to work, that money circulates through our economy to the benefit of local businesses. In fact, every dollar of EITC generates $1.24 of economic activity.
Hawaiʻi’s EITC will expire at the end of the year if our state Legislature does not urgently act by April 28. But the legislature has an opportunity to not just extend the program for a few years, it can commit to fund it in perpetuity and expand it to reach more of the families that need it most. Under a refundable EITC, when an individual’s tax liability is smaller than the amount of the credit, they are given a refund check for the difference. Doing this would boost the incomes of close to 100,000 households by an average of $424 annually.
As a state, we cannot afford to let a policy like EITC expire. It continues to serve as a vital tool for investing in Hawaiʻi’s working families and a link to strengthening our economy and communities.