Cash tax credits give economic power back to people

Direct payments through tax credits empower families to meet their basic needs, and to get ahead.

Vision

Vision

Cash is the currency of life – it’s what we use to provide food and housing for ourselves and our families, to pay for childcare, to get to and from work, to buy what we need. Cash offers the freedom to make choices, and the resources to create stability. And cash–when provided directly through targeted tax credits to the people who need it most – becomes one of the most powerful, practical tools available for people to be able to meet their needs and have agency over their lives.

While the federal government is the biggest player in providing cash tax credits, states play a critical role. States can respond to the needs of local communities, filling in gaps in the federal scheme to address people’s specific needs. By making sure cash goes to those who need it, states can ensure the biggest impact for the maximum number of families.

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The Challenge

The Challenge

Thirty-one states, alongside Washington D.C. and Puerto Rico, provide direct cash transfers in the form of tax credits–typically Earned Income Tax Credits to boost low wages, and increasingly, Child Tax Credits to support families. States structure these credits in a myriad of ways, but like their federal counterparts, state credits often have exclusions or conditions that limit their reach and effectiveness. For example, many tax credits have income requirements, which means people who engage in work that doesn’t earn a paycheck — like taking care of young kids or getting a college degree — aren’t eligible. Some state tax credits exclude non-citizens, even though they pay taxes just the same. And outmoded tax filing systems put the burden on people to overcome a complicated and expensive process just to provide information that in many cases the state already knows. Finally, although we know that paying credits monthly supercharges their impact (for the same amount of money), most states still pay out only once a year, in a lump sum. 

So even though we know that unrestricted cash through generous, automatic and monthly tax credits is a simple solution to address poverty and the rising cost of living, many existing state tax policies perpetuate outdated, complicated, exclusionary and often racist systems. We’re working to change this.

What We Do

What We Do

We bring together individuals, organizations, and like-minded lawmakers around the idea that unrestricted cash is the most efficient and effective way to improve people’s lives. We help build and support state campaigns headed by changemakers on the ground and give them the resources they need to build powerful coalitions of experts, communicators, organizers, and advocates. We advance bold ideas to transform state tax codes into mechanisms for getting unrestricted cash to families. Our goal is a network of state tax credits that are generous in value, inclusive in eligibility and modern in administration. We want to see the states pick up where federal tax credits leave off, so that people of every state can rely on direct cash payments when they need financial support. 

Ultimately, we are laying the groundwork for a national guaranteed income–because people know best how to use the money to make their lives better.

Impact

Impact

We’re supporting campaigns in states across the country – resulting in wins that have delivered millions of dollars in people’s pockets. We and our in-state partners have worked together to pass bills that eliminate income requirements, and increase the amount of cash delivered while expanding eligibility for young people, the elderly, immigrants, and low and middle-income families.

• In California, we worked to triple the CalEITC program and establish the Young Child Tax Credit, and expand these credits to ITIN filers. This past year we helped eliminate the income requirement for the Young Child Tax Credit (a boon to approximately 100,000 families with zero earnings), protect poverty-reducing tax credits from debt interception, and double state investment in free tax prep.
• In Illinois, we worked with the diverse coalition on the ground to pass a massive EITC expansion, expanding the age of eligibility to include all workers from 18 to 65. Individuals who file their taxes with an ITIN, many of whom are undocumented were included, and we helped increase the value to 20% of the federal credit. Ultimately, 4.5 million hard-working Illinoisans will benefit from the hundreds of millions of dollars in relief each year; and a one-time check went out to the majority of tax filers in 2022 to help curb the impact of inflation.
• In Washington state, we helped create the Working Families Tax Credit, the most generous state EITC in the country, with a minimum credit of $300 for federal EITC-eligible households with income of $1 or more. In 2022, the state put an additional $10 million toward implementation and outreach for the WFTC
• In Oregon, where 1 in 10 kids live in mixed-status families, those kids will now benefit from the inclusion of ITIN filers in the state’s EITC.
• In New Jersey, we helped bring down the age of eligibility for the EITC to 18 from 21. In 2022, we helped create a brand new fully refundable CTC with no income requirement.
• In Maine, they expanded the value of the EITC, and awarded a round of $850 stimulus checks to their citizens.
• In Washington D.C., we helped expand the age of eligibility for the EITC, and create an option for the payment to be paid monthly. In 2022, we helped include ITIN filers as recipients of the EITC.

People

People