By Steve Taylor
Paul Rodriguez, a board member of Affordable Homes of South Texas and CEO of Valley Land Title Company. (Photo: RGG/Steve Taylor)
McALLEN, February 1 - Gov. Rick Perry issued a proclamation designating Jan. 31, 2008, as Earned Income Tax Credit Awareness Day in Texas earlier this month.
The EITC is a refundable federal tax credit for eligible households with earned income no more than $39,783. For the 2008 filing season, the maximum refund is $4,716.
“Financial stability opens doors of opportunity and promise, preparing Texans to embrace the challenges ahead and successfully reach their goals in life,” Perry said.
“One of those opportunities is offered by the federal Earned Income Tax Credit that pushes billions of dollars into the Texas economy each year, supporting local businesses and increasing the income of millions of Texas workers. The EITC is a valuable tool in helping eligible taxpayers lower their taxes or receive refunds.”
Don Baylor, a policy analyst at the Center for Public Policy Priorities, said EITC was “the nation’s most successful anti-poverty program” because it enables working families to address basic needs while also providing a platform for financial stability and success.
“Fundamentally, the EITC is about strengthening working families with children. For every dollar claimed by a Texas household, about 98 cents is refunded to a family with at least one child,” Baylor said.
“Each year the refundable tax credit lifts about 500,000 working Texans – over half are children – above the poverty line, enabling families to meet basic needs and build a ramp to the middle class.”
Baylor said EITC also provides a once-a-year opportunity for many working Texans to start or continue saving for worthwhile goals, such as children’s college savings or a home down payment.”
Paul Rodriguez, a former Valley banker who sits on the board of Affordable Homes of South Texas and is CEO of Valley Land Title Company, agreed.
“EITC can help make the purchase of a home possible. We can get people in to a new home for $2,500 down. You bring in $5,000 or $6,000 and a lot of great things can happen,” Rodriguez said. “It’s unfortunate more people do not know about it. So much of it goes unused. It’s part of the tax code and more people need to know about it.”
In his proclamation, Perry acknowledged that EITC can be the first step towards financial stability, enabling working families to save for college, develop a small business, or put down a payment on a home.
Perry pointed out that many eligible Texans do not claim almost $1 billion each year in EITC funds due to limited community awareness and lack of access to free tax preparation sites.
To remedy this, Perry said the Texas Health and Human Services Commission, the Office of the Attorney General, the Texas Workforce Commission, and other state agencies and community organizations were striving to inform the public of the value of the EITC and locations for tax preparation assistance.
“To assist in their efforts, the Texas 2-1-1 system connects thousands of working Texans to hundreds of Community Tax Center sites throughout the state, helping Texans ‘free-file’ claim EITC refunds and connect to asset building opportunities,” Perry added.
Baylor said that each year, the EITC delivers close to $5 billion in tax refunds that stimulate economic activity during a time in which many consumers traditionally cut back their spending.
“To a large extent, EITC refunds are spent locally, bolstering sales tax receipts while stimulating economic development,” Baylor said. “Like almost everything, the EITC is bigger in Texas, as nearly one in four tax filers are EITC-eligible, a much higher proportion than the U.S. as a whole.”
Baylor said that while the share of Texas EITC filers has grown steadily, more could be done. “We need to develop an aggressive marketing outreach campaign to ensure that more eligible Texans claim and receive the EITC,” he said. “We should commit state and local funds to support community tax centers, thereby generating a strong return-on-investment and providing state matching funds to secure federal grants.”