Too few take earned income tax credit
Although the federal earned income tax credit (EITC) program totaled more than $41 billion in 2005, many families still are unaware of its availability and do not claim it, according to the Washington-based National League of Cities (NLC). So, NLC has introduced a toolkit titled “Maximizing the Earned Income Tax Credit in Your Community,” to assist local leaders with implementing EITC awareness programs. San Antonio; Seattle; Orlando, Fla.; Little Rock, Ark.; and Savannah, Ga.; have instituted programs, which often include free tax preparation services. American City & County talked with Savannah Mayor Otis Johnson about why the EITC issue is crucial to local government leaders and their communities.
Q: Why is EITC an important issue for city officials?
A: We feel that we have an obligation to help our citizens in any way that we can. To help our most needy citizens access this revenue stream is important to them, and it’s also important to the economy of our communities. Most cities that are actively involved in this program are bringing millions of dollars of revenue to their citizens. It’s [also] an economic incentive for mayors and councils to encourage this kind of participation. Since we are closest to [our citizens], we have a responsibility to help get them involved in this program. [We need] to help convince them that once they get these refunds, they should not just spend it all but start a savings or a checking account, or [consider] an individual development account program, or to use their money in a way that aids their families. We have that responsibility to help organize at the local level and give the clout that a city, a mayor and council members would have in encouraging people to participate in this program.
Q: How is NLC reaching out to local leaders to promote the campaign?
A: We have prepared a kit for local communities [that includes] recommendations of how to organize a campaign, and there are suggestions on how to get the word out through churches, organizations, neighborhood associations and other social service agencies. Different members of the staff have taken every opportunity to encourage state municipal associations to take this on as a project also. The state municipal associations are extremely influential with their local members.
Q: How do cities join and implement an EITC program?
A: They do not have to do anything official. We would like to know who they are and what they’re trying to do so that we can keep a record of the number of the cities that are involved in the campaign. Most of [the] major cities now are engaged in this effort. We’re just trying to spread the word because about 25 percent of the people that are eligible [for the EITC] are not taking advantage of this program, and it is one of the best poverty fighting efforts that we have at the national level right now.
Q: A city’s program will differ depending on the needs of its residents. But, is there one element that makes a program successful?
A: Ready access to sites where people can file. In most of these sites, people do not have to pay to file. That is very attractive because you’ve got these proprietary tax preparers that are charging $300 or a percent of the return. By providing sites for free tax preparation, that is an additional amount of money that these needy families can have in their coffers. I think that the free tax preparation sites, readily available to our target population, is a big selling point.