The Working Families Tax Credit is a Smart Investment in a Healthier New Mexico

Increasing the Working Families Tax Credit would put another $52 million1 back into the hands of New Mexico’s hard-working families – and the businesses where they will spend it.

Support HB 23SB 183

Download this fact sheet ( Feb. 2019; 2 pages; pdf)
Link to the
companion report

  • 96% of the money returned from the two credits goes to families with children2
  • Nearly 225,000 children benefit – that’s about 44% of all NM kids3
  • 68% of claimants are people of color4
  • 54% of claimants have at least some college education — they simply aren’t earning family-sustaining wages5

Benefits of the WFTC

  • This tax credit is proven to incentivize work and allow families to purchase:
    • reliable transportation
    • child care
    • healthier food
  • Businesses benefit too as the refunds are spent quickly and locally
  • It’s a common sense, bi-partisan solution to improve health and well-being for New Mexico families

A growing body of research shows that tax policies like the Earned Income Tax Credit (EITC) and Working Families Tax Credit (WFTC) improve the health and well-being of the families and children who receive them. By expanding the WFTC, we could further improve health, address disparities, and help families thrive.

Credits Like the EITC and the WFTC are Linked to Improvements in:

  • Parents’ Health

    • Better mental health among mothers6
    • Better overall health and decreased physical and mental stress among mothers with a high school diploma or less7
    • Better physical health among men and women (ages 21 to 50)8 due to increased fruit consumption, decreased meat consumption, improved cholesterol, fewer colds, and more
  • Maternal and Infant Health

    • Better pre- and post-pregnancy health9
    • Fewer babies born at an unhealthy low weight10, 11
  • Children’s Health

    • Increased insurance coverage rates among children (ages 6 to 14)12
    • Better child health status as reported by mothers13
    • Children have access to more regular meals14
  • School Performance

    • Improved test scores, particularly in math15
    • Boosted high school graduation rates16
    • Improved academic achievement that’s equivalent to getting two extra months of schooling17
  • College Attendance

    • Boosted college enrollment rates18
    • Increased college graduation rates as well as total years of education completed19
  • Earnings in the Workforce

    • Higher long-term growth in earnings for single mothers (a mean increase of 17 percent in average annual earnings)20
    • Increased hours worked and wages earned in women with children21
  • Retirement Benefits

    • Increased retirement benefits earned through social security22

Sources
1 NMVC analysis of 2015 IRS income tax data provided by the Brookings Institute
2 Ibid
3-5 NM Voices for Children analysis of IRS 2015 tax year data from the Earned Income Tax Credit (EITC) Interactive Database provided by the Tax Policy Center, a collaborative effort of the Urban Institute and Brookings Institution
6 Boyd-Swan, et al. March 2013. ” The Earned Income Tax Credit, health, and Happiness” Discussion Paper.
7 Evans, W.N., and Garthwaite, C.L. 2014. “Giving mom a break: The Impact of EITC Payments on Maternal Health.” American Economic Journal: Economic Policy 6(2):258-290.
8 Rehkopf, et al. Dec 2014. “The Short-term Impacts of Earned Income Tax Credit Disbursement on Health.” International Journal of Epidemiology 43(6): 18884-1894.
9 Hamad R., and Rehkopf DH. Sept. 2015. “Poverty, Pregnancy, and birth outcomes: A study of the Earned Income Tax Credit.” Pediatric Perinatal Epidemiology 29(5): 444-452.
10 Hoynes et al. Feb 2011. “Income, the Earned Income Tax Credit and Infant Health.” American Economic Journal – Economic Policy 7(1): 172-211.
11 Strully KW et al. Aug 2010. Effects of Prenatal Poverty on Infant Health: State Earned Income Tax Credits and Birth Weight. American Sociological Review 75(4): 534-562.
12 Baughman et al. March 2016. “State Earned Income Tax Credits and the Production of Child Health: Insurance Coverage, Utilization, and Health Status.” National Tax Journal. (1):103-132.
13 Averett S. and Wang Y. July 2015. ” The Effects of the Earned Income Tax Credits on Children’s Health, Quality of Home Environment, and Non-Cognitive Skills” IZA Discussion Paper Series No 9171.
14 bid
15 Maxfield, M. Nov 2013. “The Effects of the Earned Income tax Credit on Child Achievement and Long-Term Educational Attainment.” Job Market Paper
16 bid
17 Marr, C., et al. Oct 2015. “EITC and Child Tax Credit Promote Work, Reduce Poverty, and Support Children’s Development, Research Finds.” CBPP
18 Manoli DS and Turner N. Jan 2014. “Cash-on-Hand & College Enrollment: Evidence from Population Tax Data and Policy Nonlinearities” National Bureau of Economic Research Working Paper No. 19836.
19 Thomas PW. Nov 2017. Childhood Family Income and Adult Outcomes: Evidence from the EITC. Purdue University.
20 Dahl, M et al. May 2009. “Stepping Stone or Dead End? The Effect of the EITC on Earning Growth.” IZA Discussion Paper No 4146.
21 Neumark, D and Shirley P. Revised May 2018. The Long Run Effects of the Earned Income Tax Credit on Women’s Earnings. National Bureau of Economic Research Working Paper No. 24114.
22 Dahl M. et al. March 2012. The Earned Income Tax Credit and Expected Security Retirement Benefits among Low-Income Women. Working papers Series Congressional Budget Office Washington, D.C.