"By the end of the day on Monday, April 18, the federal government will have lifted roughly 10 million people — 5.3 million of whom are children — out of poverty, and made poverty less severe for some 20 million others.

Well, kind of.

April 18 marks Tax Day, the due date for federal tax returns. And while just about all of us grumble about paying taxes, it’s also an opportunity to acknowledge all of the important services that our tax dollars make possible — from public schooling, to consumer protection, to transportation infrastructure, and beyond. And this year, we should reserve special praise for one of our most potent anti-poverty tools — tax credits for working families." 

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Well, kind of.

 

 

April 18 marks Tax Day, the due date for federal tax returns. And while just about all of us grumble about paying taxes, it's also an opportunity to acknowledge all of the important services that our tax dollars make possible — from public schooling, to consumer protection, to transportation infrastructure, and beyond. And this year, we should reserve special praise for one of our most potent anti-poverty tools — tax credits for working families.

 

 

The Earned Income Tax Credit (EITC) and the Child Tax Credit (CTC) are refundable tax credits targeted mostly at low- and moderate-income working families. The size of the credits are tied to one's family size, marital status, and income. These tax credits reduce the amount recipients owe in taxes to the federal government — and, if the credit for which a family qualifies exceeds their tax liability, the difference is refunded to them.

 

 

So, by the time tax season has officially ended, over 27 million families will have qualified for an average EITC benefit of $3,074. Even more families will have qualified for an average CTC benefit of $1,016.

 

 

Though these tax credits bolster the economic security of millions of working families — above and below the Federal Poverty Level (FPL) — they are particularly important for the working poor. In fact, they have become one of the federal government's most effective anti-poverty measures. According to a recent U.S. Health and Human Services (HHS) report assessing the effectiveness of the social safety net over the last 50 years, these tax credits, among all other programs, did the second most to reduce overall poverty in 2014. For children, they did the most to stave off deprivation.

 

 

On top of their immediate anti-poverty impact, these tax credits have also been shown to have various other positive, longer-lasting effects — particularly for children in recipient households. Research has linked income from tax credit benefits to improved infant and maternal health, better academic performance among elementary and middle school students, greater likelihood of college enrollment, and higher earnings in future generations.

 

 

The EITC and CTC are, in short, investments that yield returns now and in the future.

 

 

But they haven't always been this effective. In 2009, as part of the economic stimulus package, lawmakers made a few key temporary improvements to the credits that, all told, boosted their anti-poverty reach by 20 percent.

 

 

These improvements, however, were set to expire in 2017, when the tax credits would have reverted to their pre-2009 status. Had this happened, over 50 million people, 25 million of whom are children, would have suffered financially. Millions would have been pushed into — or deeper into — poverty.

 

 

Recognizing the critical role these provisions play in bolstering the economic security of millions, Congress — in a rare moment of bipartisanship — made these improvements permanent just a few months ago. This marked one of the largest anti-poverty victories in the last 20 years.

 

 

While this was a huge step forward for millions of working families, Congress missed an opportunity to fix major flaws in these credits. The EITC, for one, completely misses many low-wage workers without children and does very little for those it does reach. As a result, childless low-wage workers remain the lone group of Americans taxed into poverty by the federal government. Moreover, households with income less than $3,000 annually are completely ineligible for the refundable portion of the CTC. This leaves many families — whose budgets are the tightest — locked out of this critical income support.

 

 

Yet despite their shortcomings, the EITC and CTC are incredibly effective. And their success and unrealized potential underscores the role that government has to play in alleviating poverty and promoting prosperity. While these tax credits are particularly powerful, they are only a single part of that broader effort. Other safety net programs and investments are essential, too. The close of tax season should serve as a reminder that, though our tax dollars might support a lot of important efforts, ensuring that everyone has the resources necessary to achieve their full potential is perhaps chief among them.

 

 

 

 

 

 

 

 

Trevor Brown contributed to this blog.