By Cirila Estela Vasquez Guzman, PhD
Feb. 20, 2019
Everyone should have the opportunity to pursue a long and healthy life. But only half of our health outcomes are linked to our health behaviors and access to health care. The other half are linked to social determinants of health like education, income, housing, and the environment, that impact where we live, learn, work and play. And because income is a large determinant of health, tax policies also impact health.
One type of tax policy that has been shown to impact health are tax credits. Tax credits are smart health policy investments that are associated with positive health outcomes for infants, children, and mothers. Both the federal Earned Income Tax Credit (EITC) and its companion in New Mexico – the Working Families Tax Credit (WFTC) – have been very beneficial for working families who earn low incomes. Evidence shows that tax credits for working families are critical for not only putting money back into the hands of these consumers, but for improving their health and well-being as well.
The amount the credits return depend on the filer’s income, marital status, and number of children. New Mexican families received an average of $2,700 per year from both credits combined in tax year 2015. Approximately 210,000 New Mexico individuals and families claimed the EITC and the WFTC that year, which accounts for about a third of all tax returns filed in the state.
How much income a family earns determines where they live, what access they have to schools, food, and health care, as well as the amount of stress they experience in making ends meet. Families use refunds from the EITC and the WFTC to pay for necessities, including home and car repairs, and food. They also allow families to access health care, pay down debt, provide a security deposit on a new apartment, and obtain additional education and training.
Mothers receiving the EITC have higher rates of both mental and physical health as well as a decreased likelihood of giving birth to low-weight babies. Children in households receiving the EITC are more likely to experience a home environment where they are read to, receive help with their homework, and have access to regular meals. Credits like the EITC also have long-term benefits for children such as increasing their likelihood of graduating from high school and college, which leads to higher earnings in their futures.
Overall, a growing body of research continues to document the strong connection between a wide range of tax credits and health across a person’s life span. These tax credits provide powerful opportunities for families to invest in themselves, their children, and their futures.
During the current legislative session, lawmakers have the opportunity to do more for our hard-working families. We are ranked last in child well-being and rank at or near the bottom when it comes to food, economic, and housing security. It’s imperative to meet these foundational necessities in order to improve the health of our population, and tax credits can help families achieve security in each of these areas. Proposals like Senate Bill 183 and House Bill 23 would increase New Mexico’s Working Families Tax Credit from its current value of 10 percent of the EITC to 20 percent of the EITC in order to give a boost to workers and their children.
Supporting opportunities for parents to provide for their families is central to lifting up all of New Mexico. Evidence clearly shows that we can improve our population’s health by investing in our people with tax credits. By further supporting and investing in our working families through an increase the Working Families Tax Credit, we can double down on our commitment to make New Mexico a great state in which to grow up, thrive, and start a family.
Cirila Estela Vasquez Guzman, PhD, is a Research and Policy Analyst with New Mexico Voices for Children.