American Sociological Association

A Hand Up for Low-Income Families


Internal Revenue Service
July 13, 2016

by Sarah Halpern-Meekin, Laura Tach, Kathryn Edin, and Jennifer Sykes

Welfare queens driving Cadillacs. Food stamp kings buying filet mignon. The stereotypes are rife. What if there was a way to support lower-income families without the stigma? There is. And it comes from an unexpected source: the Internal Revenue Service.

First, listen to how Tracy Sherman, a 28-year-old medical coder and single mother of two, described her time on Temporary Assistance for Needy Families (TANF), which provides means-tested cash assistance (known colloquially as “welfare”). Right after her youngest daughter was born, the baby’s father, an alcoholic, relapsed, and Tracy turned to TANF, feeling she had no other options. “I didn’t feel good as a person…. They gave me [cash] plus they gave me food stamps for formula and everything like that. And every time I used it, I felt like crap.” Now listen to Tracy’s anticipation of her tax refund check, made up largely of government transfers. “I think about [the refund] all year long… It’s like, ‘Oh, I can’t wait until I get my tax money!’” While Tracy said the $800 a month she received from TANF was not “really worth it,” the $3,500 she received as a tax refund—a far smaller sum of money—fueled her dreams all year long.

Each year the Earned Income Tax Credit (EITC) and the Child Tax Credit (CTC) lift some five million children above the poverty line. The EITC has been credited with increasing employment, particularly among less-educated single mothers. And that’s not all: the EITC has been tied to mothers receiving more prenatal care and being less likely to smoke and drink during pregnancy; in turn, their babies are less likely to be born low birth weight or preterm. The benefits for kids continue past infancy, with the children of EITC recipients being more likely to earn higher grades, graduate high school, and enroll in college (Chuck Marr’s research provides a review of the benefits associated with the EITC). All this without the humiliation and shame so many describe experiencing when receiving other means-tested cash and in-kind benefits.

Who qualifies for this program? The EITC is a refundable tax credit available to low-income workers, with its size determined by marital status, number of dependent children, amount of earnings and job status. For low-income workers without dependent children, only a small refund is available. The vast bulk of EITC payments go to parents who work but are still poor. As their incomes rise, so do benefits, with the maximum refund for a single parent of two—$5,548 delivered in one check at tax time—for those earning between $13,870 and $18,110 in 2015.

From the Spring 2016 issue of Contexts

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