State Earned Income Tax Credits as a Prevention Strategy for ACEs

March 28, 2019|10:09 a.m.| ASTHO Staff

Evidence shows that exposure during childhood to negative events, also known as adverse childhood experiences (ACEs), can increase a person’s likelihood of encountering long-term chronic or behavioral health issues, such as heart disease, violence, suicide, and substance use. ACEs, such as child abuse, neglect, or household deprivations (e.g. parental incarceration, substance use, or separation) are often clustered, with individuals who experience at least one ACE being more likely to experienced multiple ACEs. With data indicating the prevalence of ACEs extending to almost half of children nationwide, policymakers in many states are exploring ways to prevent them, as a result reducing the negative health impacts associated with them.

Preventing ACEs involves evidence-based strategies to strengthen protective factors (e.g. increasing social connectedness, access to healthcare and community resources, enhancing parental skills to promote healthy child development, and providing quality care and early education) and reduce risk factors (e.g. young parental age, parental history of abuse or neglect, low parental income, and community violence) before they occur. According to CDC, strengthening economic supports to help working families out of poverty and reduce parental stress has the greatest potential for broad public health impact on ACEs. One well known economic support that many states use is the Earned Income Tax Credit (EITC).

EITC is a refundable income tax credit that can be used to reduce the tax burden for low- to moderate-income working people. The federal government along with 29 states, Washington, D.C., Guam, Puerto Rico, and some municipalities have established EITCs. Economic support from EITC is associated with improved infant and maternal health, better school performance for children, and increased college enrollment. Research suggests that the EITC may reduce risk factors for child abuse and neglect—and therefore risk factors for ACEs—by offsetting the costs of child-rearing for working families. Many other states are considering legislation to establish, reestablish, or amend EITC programs. Below is an overview of recent state legislative activity around EITCs.

Florida, Georgia (HB473, HB588, and SB41), and Kentucky introduced similar bills allowing tax payers who receive a federal EITC to be eligible for a state EITC equal to ten percent of the federal amount. In Missouri, multiple bills were introduced addressing EITCs. Missouri’s SB 183 would allow a tax credit of five percent for tax years beginning on or after January 1, 2020. The credit would increase by five percent every year and remain at 20 percent for all tax years beginning on or after January 1, 2023. In addition, companion bills in Missouri (HB 846 and HB 1194) would authorize an EITC equal to 20 percent of what eligible taxpayers would receive under the federal EITC. In North Carolina, companion bills (H238 and S50) would reenact the state’s expired EITC allowing individuals to receive five percent of the amount of the federal credit for which the individual qualified.

Several states have also proposed legislation to increase the percentage of funds for which individuals are eligible. Connecticut introduced a bill to increase the percentage of the EITC currently set at 23 percent. In Vermont, the legislature proposed an amendment to increase the percentage of earned income tax credit from 36 percent to 42 percent. The Oregon House introduced legislation increasing the percentage of the allowed EITC from eight percent to 20 percent. The bill would also increase the percentage for taxpayers with a dependent under the age of three from 11 percent to 25 percent. The Oregon Senate introduced similar legislation increasing the EITC percentage from eight percent to 12 percent, or from 11 percent to 15 percent for taxpayers with a dependent under the age of three. A Rhode Island bill would increase the EITC from 15 percent to 20 percent for tax years beginning on or after January 1, 2020. The Indiana legislature introduced a bill to increase the EITC from nine percent to 18 percent. Nebraska proposed legislation to increase EITC from ten percent to 13 percent between January 1, 2020 and January 1, 2021, to 17 percent from January 1, 2021 to January 1, 2022, and to 20 percent after January 1, 2022. A New York bill would increase the percent of EITC from 30 percent to 32.5 percent beginning in 2019 and 35 percent beginning in 2020. In Maine, the legislature introduced a bill to increase the EITC from five percent to 15 percent for residents and nonresidents.

Finally, in Connecticut and New York there are bills to evaluate the efficacy of EITC programs. The Connecticut bill would establish a study of the eligibility requirements for their EITC as well as the eligibility implications for credit recipients on premature termination of employment. Similarly, a New York bill would require a study of the state EITC with recommendations to ensure that individuals’ net income increases when their earned income increases.

State EITCs are a promising economic support for working families that help to raise more than six million people—half of them children—above the poverty line each year. State health agency leadership can play a role in preventing ACEs by supporting evidence-based policies, such as EITCs, that prevent negative childhood events. In addition, state health agencies have an opportunity to partner with child welfare partners to champion policies addressing the primary prevention of ACEs. ASTHO will continue to track state legislative activity on this important public health issue.

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