Obama Pledges to Expand EITC – Puerto Rico Still Left Out

“There are other steps we can take to help families make ends meet, and few are more effective at reducing inequality and helping families pull themselves up through hard work than the Earned Income Tax Credit (EITC). Right now, it helps about half of all parents at some point. Think about that — it helps about half of all parents in America at some point in their lives. But I agree with Republicans like Senator Rubio that it doesn’t do enough for single workers who don’t have kids. So let’s work together to strengthen the credit, reward work, help more Americans get ahead.”

– President Barack Obama, State of the Union Address, January 28, 2014

Studies have affirmed for years that the EITC encourages work, and more recent research shows that these federal policies also improve children’s school performance and boost their productivity and earnings into adulthood.

The EITC is a refundable tax credit, meaning that it is not limited by the amount of an individual’s tax liability.  This is important because roughly half of all Americans do not earn enough income to trigger the obligation to pay federal income taxes at all.  Under the EITC, individuals throughout the 50 states can receive refund checks from the IRS even if they do not owe any federal income taxes.

The EITC, however, does not apply to Puerto Rico, a territory with one of the highest poverty levels in the nation.  Coupled with the Child Tax Credit (CTC), the EITC  lifted 9 million working people in the fifty states and District of Columbia out of poverty in 2010. Coverage of low-income workers in the territory would provide these workers — and Puerto Rico’s economy — with an estimated $520 million a year.

As a candidate, the President pledged to work for the equal treatment of low-income Puerto Ricans in the EITC.

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