Report: NM Should Boost Working Families & Build a Stronger Economy by Expanding its Earned Income Tax Credit

2019-03-07T16:50:40+00:00 Press Releases|

PRESS RELEASE
Mar. 8, 2019
FOR IMMEDIATE RELEASE

CONTACT: Sharon Kayne, Communications Director, NM Voices for Children
505-361-1288 (direct), 505-401-8709 (c), skayne@nmvoices.org
OR: Jacob Kaufman-Waldron, Center on Budget and Policy Priorities
202-325-8746, jkaufmanwaldron@cbpp.org

ALBUQUERQUE, NM—Policymakers in Santa Fe should expand New Mexico’s Working Families Tax Credit (WFTC), a state version of the successful federal Earned Income Tax Credit (EITC) that helps working families earning low wages meet basic needs. State EITCs – which are on the books in 29 states plus the District of Columbia and Puerto Rico – build on the success of the federal credit by reducing hardship for working families and children, and boosting the nation’s future economic prospects, according to a new report from the Center on Budget and Policy Priorities (CBPP).

“State lawmakers have a real opportunity this year to improve the lives of working families across New Mexico,” said James Jimenez, executive director of New Mexico Voices for Children. “Our WFTC already does a lot to help our families and kids, but a stronger expanded credit could do even more and put our state on the path toward a brighter economic future.”

New Mexico’s WFTC is worth just 10 percent of the federal EITC, far lower than what most of the other states’ EITCs are worth. Several bills currently under consideration in the Legislature would increase the value of the WFTC, including HB 6, which doubles the credit to 20 percent of the EITC.

State EITCs provide extensive benefits to children, families, and communities, and are straightforward to administer and claim. The also help rebalance upside-down state tax codes, in which low- and moderate-income families pay higher state and local taxes as a share of their income than do upper-income families. In New Mexico, the poorest families pay nearly 11 percent of their income in state and local taxes while the wealthiest 1 percent of families pay just 6 percent, according to the Institute on Taxation and Economic Policy.

By expanding New Mexico’s WFTC, policymakers would be building on recent progress made by a number of states. Puerto Rico’s new local EITC was signed into law in December 2018. Louisiana, Massachusetts, New Jersey, and Vermont all increased the size of their credits to bolster the wages of working families, while California and Maryland expanded access to the credit for people who were previously ineligible. Because state lawmakers have moved to support working families through state EITCs, almost half of all recipients of the federal EITC are also eligible for a state credit, and state EITCs boost the earnings of working families by nearly $5 billion annually. 

“The EITC helps the many working families with children who struggle to make ends meet on low wages, and it ensures that women and communities of color — two groups that disproportionately work in low-wage jobs — see the fruits of their labor and share more fully in economic growth,” said Samantha Waxman, Policy Analyst at the Center on Budget and Policy Priorities. “State lawmakers can build on the proven effectiveness of the federal EITC by expanding their state-level credits to help families keep working and reduce poverty, especially among children.”

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 New Mexico Voices for Children is a nonpartisan, nonprofit organization advocating for policies to improve the health and well-being of New Mexico’s children, families and communities.
625 Silver Ave. SW, Suite 195, Albuquerque, NM 87102; 505-244-9505 (p); www.nmvoices.org