The St. Louis Regional Chamber supports the creation of a Missouri Earned Income Tax Credit to assist our region’s most economically disadvantaged working families by helping them break the cycle of poverty. We believe public policies should encourage and incentivize employment, self-reliance and educational attainment to achieve income growth and reduce long-term dependency on government aid.
The Chamber supports taking action in Missouri to help lift working families out of poverty:
The Earned Income Tax Credit (EITC) is a federal tax credit for low- and moderate-income workers, first introduced in 1975. In its most common form it is a refundable tax credit for low to moderate income working individuals and couples—particularly those with children. Two important factors are that the credit is only available to families that earn income through work and that nearly every dollar spent goes directly to the working families the credit was created to help. The amount of EITC benefit depends on a recipient’s income and number of children. Because it is a refundable credit at the federal level, this means that the credit is paid directly to taxpayers even if their net income tax liability is zero. The Census Bureau found that the EITC lifted 5.4 million people above the poverty line in 2010.
EITCs allow working families to pay for basic necessities such as childcare, utilities and transportation out of their own wages, which keeps them at work rather than having to rely on public benefits. They are also designed to encourage families at the lower end of the wage scale to work more hours. Full-time work experience often translates into better job opportunities and a higher wage over time. According to the Center on Budget and Policy Priorities, three out of five filers who receive the credit use it just temporarily — one or two years at a time.
A major benefit of the EITC is that lower-income workers generally spend the credit immediately on goods and services, thus putting money back into the local economy.