Minimum wage and Earned Income Tax Credit together are good for working families
The Economic Policy Institute (EPI) released a new study about the minimum wage and the Earned Income Tax Credit (EITC). According to the study, “The EITC and minimum wage work together to reduce poverty and raise incomes”, the working families can get more money into their pockets with the aid of the EITC and minimum wage together.
The study said that the tax credit needed to be encouraging for the taxpayers to take advantage. The low-income parents get a rebate on their taxes through the EITC. The EITC applies to the federal and some state taxes. In 2018, the Illinois income tax has an 18 percent match of the federal EITC. The working parents earn up to $55000 through the EITC in Illinois.
The report of the EPI revealed that 22 million working families got relief from the federal ETIC in 2018. The average tax rebate remained $3191 in 2018. A study has found that the additional income has great impacts on maternal and child health. The EPI study stated, “The additional income is extremely valuable to recipient families.” The educational outcome of the children also improves with the additional income of the working families.
The low-wage workers can improve their living standards through the combination of the EITC and minimum wage. The study did not find any connection between raising the minimum wage and lowering employment. The EITC only provides rebates to those who work. The report said that the EITC encourages people to work as it is for the working people. In the 1990s, the tax credit increased the labor-force participation of single mothers.
The EPI study stated that the current minimum federal wage was too low for the workers to support their families. Illinois has increased the minimum wage and it is working on bringing the minimum to $15 in 2025. The report states, “The EITC can raise earnings above the floor guaranteed by the minimum wage.”
