Nearly half of Hawaiʻi’s residents struggle to make ends meet. Caught between rising costs and stagnant wages, families continue to fall behind despite working one or more jobs.
What if a public program could give these families more economic security, improve health and educational attainment, and support upward mobility?
There is such a program: It’s called the Earned Income Tax Credit.
The Earned Income Tax Credit (EITC) is a powerful tool to help lift families out of poverty. It encourages work and the economic security needed to support healthy lives, get a good education, and increase future earnings. With decades of success at the federal level, most states and even some local governments have created complementary EITC programs.
The federal government and 24 of 29 states and the District of Columbia offer a refundable EITC. “Refundable” means that eligible tax filers get a refund if the tax credit they’ve earned is more than the taxes they owe.
Refundability makes the EITC much more effective, especially for families with the lowest incomes. That’s because these families are likely to qualify for tax credits that amount to more than their income tax liability. Unfortunately, the state EITC that Hawaiʻi adopted in 2017 is not refundable. That means that the lowest-income households–the people who need it most–are not getting the full value of Hawaiʻi’s tax credit.
Creating our state Earned Income Tax Credit was an important achievement. Now it’s time to:
- Make the state EITC refundable; and
- Remove the “sunset” provision that would end it in 2023.