ALAMEDA COUNTY – New research estimates that Alameda County will miss out on $35.9 million in economic activity and 200 jobs that could have been generated this year by the Earned Income Tax Credit (EITC), a federal refundable tax credit that brings refunds of up to $5,657 to lower income workers. This is because thousands of County residents will fail to claim over $29 million in EITC refunds, according to the new report Left on the Table, published through a collaboration between the New America Foundation and economists at California State University at Fresno.
"Research has shown that programs such as the Earned Income Tax Credit have a ‘ripple effect’ in local economies, as most of the refunds are spent at local businesses, which can then hire and pay more workers," said Maria Sotero, a research associate for the Asset Building Program of the New America Foundation.
"It's rare for a program to both boost the local economy and support working families,” said Sotero. "And because more people typically qualify when times are hard and unemployment is up, the EITC works even better when the need is highest," said Sotero.
The EITC is a federal refundable tax credit that is designed to give a financial boost to people at the low end of the pay scale. To qualify a resident must have earned income, not be claimed as a dependent, and meet certain income requirements, along with other qualifications. The average amount claimed in Alameda County was $1,678 in 2006, according to the new report.
The EITC is widely recognized as the federal government's most effective antipoverty program, lifting millions of low-income families and children out of poverty every year while incentivizing work and stimulating local economies. As part of the American Recovery and Reinvestment Act, the income thresholds and maximum refunds have been increased for tax years 2009 and 2010.
"We found that the EITC refunds, when spent in Alameda County, translate directly and indirectly into economic growth for small businesses that lead to job creation and tax revenue locally and for the state," said Antonio Avalos, report co-author and professor of economics at California State University at Fresno.
"We've always known how important these refunds are to California families," said Anne Stuhldreher, a senior research fellow at the New America Foundation. "This report is the first to show how important they are to our local economies. By encouraging people to find out if they're eligible for these refunds, we can give struggling families a financial boost and stimulate the economy at the same time," she said.
Alameda County already benefits from EITC refunds and the resulting economic activity when they are spent. The EITC refunds claimed in the county in 2006 totaled $116 million. But this amount could be even higher. The report's main estimates include:
- Spending resulting from Alameda County residents' receipt of the federal EITC created an estimated $131 million in business sales in the County, 730 jobs, and nearly $35 million in wages in 2006;
- If all EITC refunds are claimed this tax year, they will spur an estimated additional $35.9 million in county business sales -$15 million of that within the City of Oakland - pay $9.6 million in wages, and add 201 jobs to the County economy; and
- Statewide, the authors estimate that spending resulting from EITC claims will generate $88 million in taxes for state and local governments.
To learn if they're eligible for the EITC, Alameda County residents can go to www.weconnect.net, an initiative of California First Lady Maria Shriver, or call 211 to learn about local free tax preparation services.
The New America Foundation has long worked toward helping people permanently exit poverty by advancing financial empowerment policies to make it easier for them to build savings and enter the financial mainstream.
The full report is available here: http://assetsca.newamerica.net/publications/policy/left_on_the_table
For media inquiries, please contact Elizabeth Wu at (510) 295-9859 or firstname.lastname@example.org.