State needs to try its own Earned Income Tax Credit

United Way focuses on the basic building blocks of a good quality of life: education, income and health. It isn’t often that we have the chance to support public policy that can address all three.

This year, the Montana Legislature has an opportunity to strengthen low- and moderate-income working families by creating a state version of the federal Earned Income Tax Credit. The Senate is considering SB 156, and the House is considering HB 391, both of which will help Montana working families make ends meet and substantially improve the lives of children, families and communities across Montana.

The federal Earned Income Tax Credit helps boost the incomes of low- and moderate-income working families. Its most significant beneficiaries are children. In 2015 alone, the federal tax credit lifted more than 3.3 million children out of poverty. This tax credit is available only to working families, and has been incredibly effective. Most recipients of the Earned Income Tax Credit receive the credit for just one to two years, and then no longer need it.

Recognizing that the Earned Income Tax Credit is one of the country’s most successful anti-poverty policies, more than half of states have now enacted their own working families credit to further help families make ends meet. It is Montana’s time to do the same and help nearly 80,000 working Montana families.

The federal tax credit improves financial stability and independence of individuals and families. Recipients report using their credit to pay bills, fix their cars, pay for braces or summer camps for their children, and make other smart investments. A state Earned Income Tax Credit is a cost-effective way to further help families catch up on bills and cover other family necessities.

A state tax credit could also improve children’s education. Studies show that children’s school performance improves when their family’s income increases. Down the road, this investment continues to pay off. Studies show children whose families received the credit are more likely to attend college and earn more as adults. By the time they reach 25, they can actually earn 17 percent more than they would have without the Earned Income Tax Credit.

A state tax credit would also promote better health. In the 1990s, researchers found that healthier babies were born to mothers who received the Earned Income Tax Credit, in comparison to those who struggled without financial assistance. The mothers also were healthier. Years later, children whose families receive the credit are less likely to develop illnesses associated with childhood poverty. Families see lifelong benefits when children have a strong, healthy start.

Montana’s families living in poverty have some of the highest tax liabilities of nearly any state in the nation. A state Earned Income Tax Credit would make life easier for these working families. In fact, research shows a state tax credit can actually help reduce the number of people who receive cash welfare assistance.

If our legislators truly want to improve the lives of working families across the state, they should seize this opportunity to create a state Earned Income Tax Credit. There is no better work they can do than improving the lives of our children. Income, education, and health, all in one. It’s a great investment.

Sherry Stevens is the executive director and chief executive officer of Northwest Montana United Way in Kalispell, representing five counties. She was joined in signing this letter by United Way executives from Missoula, Billings, Bozeman, Great Falls and Helena, representing nine additional counties.