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If you worked but earned less than $53,000 last year, you may qualify for a refundable tax credit called the Earned Income Tax Credit (EITC). It could be worth as much as $6,200.
Friday, January 29, is National EITC Day, a nationwide effort to increase public awareness about the benefits of the federal EITC, which is available to low- and middle-income working families. It helps working folks meet basic needs for food and transportation and provide for their children. New Mexico’s Working Families Tax Credit (WFTC) is based directly on the EITC and provides additional benefits for New Mexico’s working families and communities. It can be worth up to $620 for those who qualify for the EITC.
The EITC has been making the lives of workers a little easier since 1975. Yet the IRS estimates that nationwide one in five eligible workers still miss out on the EITC, either because they don’t claim it when filing or they don’t file a tax return. This is money that can and does make a big difference. Last year alone, New Mexico’s working families received more than $513 million from the federal credit and more than $51 million from New Mexico’s WFTC. The average amount New Mexicans received last year was $2,652 when the two refunds are combined. That’s money working families are very likely to spend quickly and locally at businesses in their own communities, so it’s good for the state’s economy too.
The amounts of the EITC and WFTC vary by income, family size, and filing status. The credits are for workers whose earned income does not exceed the following limits:
• $47,747 (or $53,267, if married and filing jointly) with three or more qualifying children
• $44,454 ($49,974, if married and filing jointly) with two qualifying children
• $39,131 ($44,651, if married and filing jointly) with one qualifying child
• $14,820 ($20,330, if married and filing jointly) with no qualifying children
The online EITC Assistant can help you determine your filing status and eligibility, and estimate the amount of your federal credit. This help is available in both English and Spanish. Free help preparing your return and claiming the EITC and WFTC is available at volunteer income tax assistance sites such as CNM’s Tax Help New Mexico, which has locations across the state. To find a location near you, visit CNM’s Tax Help website or call (505) 224-4829. You may also call the IRS at 1 (800) 906-9887 for assistance.
People who work full-time should not have to live in poverty. Refundable tax credits like the federal EITC and New Mexico’s WFTC incentivize hard work, help working families, and drive economic activity in New Mexico communities. The credits can and do make working families’ lives a little easier.
Amber Wallin is the KIDS COUNT Director for NM Voices for Children.
In his January 14 column, Winthrop Quigley called Medicaid an essential part of a social safety net but took issue with the notion that the federal funding is good for the state’s economy. He claimed that Medicaid cannot help people out of poverty. I disagree on both counts.
I’ve suffered from depression most of my life. Untreated, my depression impacted my decision-making process and, consequently, I could not handle the kind of stress that is inherent in most professional jobs. So, despite having earned my college degree, I was making poverty-level wages waiting tables. I was in a classic Catch-22 situation: without access to health care, I could not handle the kind of job that would provide me with health insurance. Without health insurance, I could not access the health care I needed.
I was fortunate enough to find a health care program serving low-income New Mexicans through UNM Hospital. It was not Medicaid but it was publicly funded. It allowed me to see a doctor and get prescription medications that were otherwise cost prohibitive. The medications stabilize my brain chemistry and that has enabled me to work in my chosen profession, where I earn a middle-class income. In the 20 years since I needed that program, I’ve more than paid back what it cost the state with the higher income taxes I pay. That makes the program a good financial investment from the state’s point of view. It was life changing from my point of view.
Unfortunately, Quigley’s column was not really about extolling the virtues of safety-net programs like Medicaid. The crux was to criticize New Mexico Voices for Children for calling Medicaid an economic engine. Apparently, we should only urge full funding of Medicaid because it’s the right thing to do. Pointing out the economic benefits, he argued, was the same as saying “poverty is good” for New Mexico. As if we think getting people enrolled in Medicaid so New Mexico can collect the federal dollars is an end unto itself.
Like Quigley, we believe that funding Medicaid is the right thing to do, but we’ve found that argument only gets you so far with the people who hold the state purse strings. Even lawmakers who agree must admit that the state has limited money.
We learned years ago that the best way to counter the “we can’t afford it” argument was by making the economic argument. Medicaid creates demand for health care, and that creates jobs in the health care sector. Those jobs create other economic activity as salaries are spent in the community. Every dollar the state spends on Medicaid brings in almost four dollars of federal money. So, really, we can’t afford to not fully fund Medicaid. Over the past year, the Medicaid expansion has created more jobs than anything else. Lawmakers need to remember that before they decide we can’t afford to fully fund it.
But that’s just the economic argument. We don’t advocate for Medicaid funding because we believe poverty is a federal gravy train. We don’t see poverty as some sort of perverse industry. We advocate for full funding of Medicaid because we know—some of us in a very personal way—that safety-net programs help people lift themselves out of poverty. We know that poverty is caused by more than low-wage jobs. It’s also caused by chronic health conditions that limit a person’s employability, by the toxic stress of a dysfunctional home life that limits a child’s ability to concentrate in school, and much more.
We advocate for safety-net programs because people need support systems in order to fulfill their potential. For those with resources, these support systems are provided by families and communities. For those without resources, support systems need to be provided some other way. But like the “economic engine” argument, these supports are merely a means to an end. Medicaid is an investment in human capital. Healthy, motivated, well-educated human capital is what drives economic development.
Social safety nets can change lives. I’m proof of that and I am deeply grateful for it.
Sharon Kayne in Communications Director for New Mexico Voices for Children
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A New Mexico senator says he’s “not a fan of tapping the permanent fund unless the state is in dire straits” in the recent story about using a tiny percentage of the state’s school permanent fund to expand early childhood care and learning programs (Santa Fe New Mexican, Dec. 2, 2015). It begs the question—exactly what would constitute “dire straits” in the senator’s opinion?
New Mexico already has the highest rate of child poverty in the nation, is next-to-last in child well-being and in math and reading scores, and has the third highest rate of child hunger. We have the resources to fix this, but some legislators don’t want to let the voters decide whether this state of affairs qualifies as dire enough to make the investment.
And it’s not just the kids who are suffering. Our post-recession job growth is worst in the nation—despite the big corporate tax cuts handed out by the Legislature that were supposed to “create” jobs. We have the highest rate of long-term unemployment, our violent crime rate is high, and every week we read another news story about how our best and brightest are fleeing the state for better opportunities elsewhere. Can it get more dire than that?
To be fair, another state senator also made statements in that article that ignored the overwhelming reality of our crisis of child well-being. One said it’s not “fiscally responsible to hit the permanent fund.” It’s a 15 billion dollar fund. That’s billion with a B. What’s more, in the five years since lawmakers first discussed using the fund to expand early childhood care and learning, it has grown by a whopping $5 billion. And that’s after losing a couple billion bucks in the Stock Market crash. Our child poverty rate has been growing too. In 2010 it was 24 percent. Now it’s 30 percent—the worst rate in the nation.
So what would have happened if lawmakers had allowed voters to pass the amendment to take 1.5 percent from the fund back then? We could have expanded pre-kindergarten to every single 4-year-old in the state. Not only that, the fund would still be worth some $14.5 billion and we’d already be reaping the benefits of increased investments in our children’s education.
It would have been a more fiscally responsible thing to do, too. According to a report by the National Institute for Early Education Research (NIEER), the estimated rate of return on state-funded pre-K is 18.1 percent. That sure sounds better than the 11 percent average growth we’ve gotten on the school permanent fund over the years, and it’s way better than the 4.77 percent return rate cited in the article.
In case you’re thinking it’s a shame some lawmakers didn’t know about those great returns on our NM Pre-K investment when they first began to shoot down legislation to fully fund it from the school permanent fund, allow me to set your mind at ease. That report was released in 2009. They knew.
The data are there—and not just in the report cited above. There have been multiple longitudinal studies and several nationally regarded economists have said it’s the best investment states can make.
So let’s be honest here. New Mexico is dead last or near dead last in the nation on a number of troubling indicators. We’re in dire straits. And we’re sitting on a massive permanent fund that can make a difference for our state’s most valuable resource—our youngest children. Data and research show that the smartest investment we can make is in our kids. We need to fully fund home visiting, high-quality child care, and pre-K in order to turn child well-being around in New Mexico. The rainy day is upon us. It is up to us to demand that lawmakers take action on this issue now before another five years slip by.
Amber Wallin, MPA, is Kids Count director for New Mexico Voices for Children.
Much like Dan Herrera, I also made it out of poverty, but I realize that I was one of the lucky ones (Albuquerque Journal, Nov. 5, 2015). For every one that is successful there are hundreds who are not. None of us becomes successful entirely on our own. Teachers and government programs played an important role. If it wasn’t for food stamps and commodities I would’ve gone to school hungry. Government assistance after my Grandmother died ensured we could pay the rent. Encouraging and supportive teachers helped me make it through some pretty traumatic and rough times. President Johnson’s war on poverty allowed me attend college. As a first-generation high school and college graduate the UNM College Enrichment Program was key in my earning my first of three degrees.
The poverty we faced in the 1950s and ’60s is different from what children face today. Most kids had a stay-at-home parent. Fathers like Mr. Herrera’s may not have made great money in their blue-collar jobs, but it was still enough to put a roof over his family’s heads and food on their table. Many good-paying blue-collar jobs have disappeared, wages have stagnated, and prices have risen. Today it is extremely difficult to support a family on one income.
Childhood itself has changed tremendously. Our parents had more influence on us because we had fewer distractions. There were four TV channels. Video recorders and video games did not yet exist—not to mention computers, smart phones, etc. We didn’t even have that many toys that ran on batteries. Much less of our food was processed, so it was more nutrient-dense and was free of today’s preservatives and chemicals.
So what does this all mean? We had a parent who was there when we got home from school. We had toys and activities that helped us build the neuropathways our brains would require in order to learn in school. A lot of our play time required the use of our imagination because our toys didn’t “do” anything for us. It wasn’t just safe to play outside, it was safe to walk to a friend’s house or the local park by ourselves.
Yes, middle- and upper-income parents must mitigate the influence of our 21st century distractions, but today, as in the past, they have access to more resources. Higher-income parents don’t have to make the choice between high-quality foods and having enough to eat, and can keep their kids from languishing in front of a screen by getting them out to play soccer or have dance or music lessons. This is why middle- and high-income kids don’t lose as much ground over the summer—they have access to enriching activities that poorer kids do not.
There have been other significant changes. The ‘war on drugs,’ three-strikes laws, and mandatory minimum sentences have led to a much larger share of the population behind bars, meaning more single-parent families.
Mr. Herrera mentions the “poverty industry” in reference to advocates like me who work to ensure that children in poverty have access to the opportunities that will put them on the path to success. There is, in fact, a very real poverty industry—businesses that prey upon the poor like payday lenders, rent-to-own retailers, big tobacco, and the for-profit prison industry, among others.
We can neither enact policy by exception nor rely on the philosophy that, “I made it out and so should you!” Yes, many children made it out of the poverty of the 50s and 60s and many were lucky that they had a home, stable parents, and a family that valued education and maybe were able to make sacrifices to buy an encyclopedia. We’re not all that lucky.
Poverty is not an excuse, but it is a harsh reality that morally we can’t ignore.
Veronica C. García, Ed.D., is executive director of New Mexico Voices for Children.