Earned Income Tax Credit - Kentucky Youth Advocates

DECEMBER 2013

ISSUE BRIEF SERIES The Blueprint for Kentucky’s Children is a unified policy agenda for child advocates across the Commonwealth. Our goal is to make Kentucky the best place to be young.

For more information, contact: Katie Carter

[email protected]

To learn more about the Blueprint for Kentucky’s Children and current legislative priorities, visit www.blueprintky.org

A State Earned Income Credit Would Help Kentucky Families and Local Economies Built on the premise of supporting work over welfare, the federal Earned Income Credit (EIC) is designed to encourage and reward work while also delivering much-needed support to low-income families. The EIC has a proven record of getting and keeping people working. It can only be claimed by people who earn income through work, and the credit is structured to encourage people to work more hours. The EIC has become the nation’s largest and most successful anti-poverty program and has a thirty-year proven track record of lifting children and families out of poverty.1 The federal EIC alone lifted 6.1 million people, including 3.1 million children, above the poverty line in 2011.2 Twenty-five states and the District of Columbia have gone one step further by establishing a state EIC to further encourage work among low-income families, reduce poverty, and stimulate local economies.3 In today’s economic climate, even hardworking Kentucky families may struggle to make ends meet. This has a devastating ripple effect in our communities, with families unable to pay bills like rent and utilities and unable to purchase necessities like food, clothing, and car repairs. Families make these purchases locally so when they decrease, local businesses feel the pinch as well. A strong Kentucky economy truly hinges upon all residents – particularly low-income families – having more money in their paychecks. Implementing a state EIC in Kentucky would help thousands of low-income families and, in turn, our local businesses and our economy. This brief examines the federal EIC and

the benefits a state EIC would provide to Kentucky’s working families and local economies if such a credit were implemented in the Commonwealth.

A Proven Approach The federal EIC was instituted in 1975 to encourage and reward work by offsetting the cost of federal payroll taxes for low-income families. In the early 1990s, the EIC was expanded to ensure that full-time workers earning the minimum wage would not have to live in poverty.4 Research shows that the EIC increases the number of people working and helps families build their assets.5

Benefits to Families The federal EIC helps more parents, particularly single mothers, move into the workforce.6 When wages alone are not enough for families to make ends meet, the addition of the EIC encourages parents to work more while also supplementing annual income. Research shows that over time these parents experience growth in their earnings.7 Research also indicates state EICs contribute to even more increases in workforce participation in states where a credit is available.8 The EIC also directly benefits families by helping cover the costs of basic needs. Many families who are working, many at more than one job, have low wages. This often means they don’t earn enough to meet their daily living expenses or access routine health care. In 2012, 410,000 Kentucky taxpayers claimed $912 million from the federal EIC; the average amount received was $2,200.9 www.blueprintky.org

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A STATE EARNED INCOME CREDIT

All children benefit when they live in families with adequate resources to meet their basic needs. The EIC lifts more children out of poverty than any other federal program. Without the EIC, the poverty rate among children would be as much as 25 percent higher.10 Between 2009 and 2011, the federal EIC alone kept more 50,000 Kentucky children out of poverty.11 With the fifth highest child poverty rate in the nation (27 percent), Kentucky needs to implement as many proven poverty reduction strategies as possible.12 Although most families only receive the federal EIC for one or two years at a time, the temporary support can have lifelong implications for children. Increased income for families with very low income (under $25,000) results in children doing better in school and working and earning more as adults. For example, an increase of $3,000 in family income in early childhood means the children will work almost a month more each year and earn 17 percent more as adults.13 Research shows a direct link between families of young children receiving additional income through the federal EIC and the improvement of their children’s math and reading comprehension.14 State EICs are also correlated to healthier babies and better outcomes across the course of children’s lives.15 A 2010 study revealed that living where there is a state EIC reduces the odds of maternal smoking by five percent.16 This is of particular importance for Kentucky where almost one in four mothers smoke during pregnancy.17 The same study also revealed a link between the presence of a state EIC and increased birth weights among infants.18 Nearly one in ten babies in Kentucky is born at a low birth weight.19 Infants with low birth weights are 24 times more likely than those born at normal weights to die within their first year.20 Children born at a low birth weight also face increased risk for serious health problems as newborns, developmental and intellectual disabilities, cerebral palsy, and vision and hearing loss.21

Benefits to Communities, Businesses, and Economies Increasingly, the federal EIC is being recognized as not only a financial support for people but 2

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also for places.22 The EIC strengthens local communities by providing a concentrated infusion of cash.23 In Kentucky, the infusion of EIC dollars claimed is over $22,000 per square mile; in urban counties the infusion rate can extend well beyond $100,000 per square mile.24 A refundable state EIC in Kentucky could bring thousands of dollars more into these communities.

more children being better prepared for the workforce as a result of their families’ access to a state EIC. The EIC also strengthens local economies. Families mostly use the federal EIC to pay for basic necessities.27 That spending takes place at local stores and businesses, stimulating the local economy. In the last decade, several studies have measured the economic effect of the credit. These studies have demonstrated that every dollar of EIC refund to taxpayers generates local economic activity worth: $1.07 in Nashville; $1.40 in Fresno; $1.58 in San Antonio; and $1.67 in Michigan.28 Additionally, according to a 2008 report by the U.S. Conference of Mayors: “Economists suggest that every increased dollar received by low- and moderate-income families has a multiplier effect of between 1.5 to 2 times the original amount, in terms of its impact on the local economy and how much money is spent in and around the communities where these families live.”29

Small businesses depend on reliable workers. The EIC can be used to repair or maintain vehicles or pay for childcare, thus increasing a family’s ability to keep existing jobs or secure new employment opportunities. The EIC can also help Kentucky businesses in the future by providing a more skilled workforce. An estimated 54 percent of all jobs in Kentucky will require postsecondary education by 2018.25 Right now, only 29 percent of all adults in Kentucky ages 25 and older have an associate’s degree or higher.26 Kentucky businesses, and the Kentucky economy, would benefit from

A state, refundable EIC in Kentucky would help low-income, working Kentuckians keep more of their hard earned money and reduce inequities in the system by offsetting their heavy tax burden. This, in turn, would enable low-income workers to pay their bills on time and make more local purchases, boosting local businesses. Moreover, it would decrease reliance on state aid programs. Chart 1

Who is Hit the Hardest? A Distributional Analysis of Kentucky State and Local Tax Payments as a Proportion of Income, 2013 $21,800

12%

Percent of Income

Benefits to Children

10%

$36,400

$8,500

$60,300

$97,500 $190,300

8%

$759,000*

6% 4% 2% 0% -2% -4%

Lowest 20% Second 20% Middle 20% Fourth 20%

Next 15%

Next 4%

Top 1%

Income Group Sales & Excise

Property

Income

Federal Offset

Total (inc. Federal Offset)

Source: Institute on Taxation and Economic Policy, Who Pays? 4th ed. Available at http://www.itep.org/whopays/. *Average income in group

BLUEPRINT FOR KENTUCKY’S CHILDREN A More Fair Tax System Families that receive the EIC work and pay taxes, including federal payroll, state, and local taxes. However, when it comes to paying taxes it costs more to be poor. When sales, excise, property, and income taxes are all taken into account, low-income workers pay a larger share of their income in taxes than higher-income individuals. Those with the least disposable income pay a higher percentage of their overall income to live and work in Kentucky. Kentuckians making an average of $36,400 currently pay a larger share of their income in taxes than those making an average of $759,000—eleven cents on the dollar compared to six cents on the dollar—when sales, excise, property, and income taxes are all taken into account (see Chart 1).30 In addition to paying taxes now, EIC recipients can be expected to continue contributing to the tax system over time. Three out of every five federal EIC recipients claim the credit for only one or two years at a time. Additionally, most recipients pay more in federal taxes over the long run than they receive in EIC benefits during these short periods of time.31,32

How the Federal Earned Income Credit Works The federal EIC is a tax credit extended to lowwage workers. The tax filer must earn wages in order to qualify for the credit. The credit benefits families with children the most, and the value of the credit varies depending upon family size and income level. Married couples qualify for credits at higher earned incomes than single filers (see Chart 2). The more workers earn, the more their EIC credit is worth, up to the maximum benefit. For tax year 2013 the maximum benefit levels are as follows: 7 $6,044 for married-couple families with three or more children with incomes from $13,400 to $22,899 (or $17,549 if single); 7 $5,372 for married-couple families with two children with incomes from $13,400 to $22,899 (or $17,549 if single); 7 $3,250 for married-couple families with one child with incomes from $9,550 to $22,899 (or $17,549 if single); and 7 $487 for married couples with no children and incomes from $6,350 to $13,349 (or $7,999 if single).33

Chart 2

Value of Federal Earned Income Credit, 2012 $6,044 $5,372

$3,250

$487 0

$10,000

$20,000

$30,000 Income Level

Single 7 No Children 7 2 Children 7 1 Child 7 3 or more Children

$40,000

$50,000

Married Filing Jointly No Children 2 Children 1 Child 3 or more Children

Source: Internal Revenue Service, IRS Form 1040 (2013 Draft), 2013 Earned Income Credit (EIC) Table. Available at http://www.irs.gov/pub/irs-dft/i1040tt--dft.pdf.

After the worker’s earnings become high enough that the taxpayer is receiving the maximum credit amount, the value of the credit remains the same as earnings grow until the earnings reach a phase-out range where the credit begins to fall as the worker earns more income, until the credit disappears.34

The federal EIC is a refundable tax credit, meaning that if the value of the credit exceeds the tax filer’s tax liability, the taxpayer receives a refund for the full value of the credit, not just a refund of any taxes due before considering the credit.35 The refundable portion of the credit helps offset other taxes that low-income workers pay, such as payroll taxes.

Estimated Federal EIC for Kentucky Families, Tax Year 2013

• Married Couple • 3 Children • Earning $38,000 +$2,852 • Married Couple • 1 Child • Earning $23,000 +$3,226 • Single Mother • 2 Children • Earning Minimum Wage +$5,372 Source: Internal Revenue Service, IRS Form 1040 (2013 Draft), 2013 Earned Income Credit (EIC) Table. Available at http://www.irs.gov/pub/irs-dft/i1040tt--dft.pdf.

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A STATE EARNED INCOME CREDIT Federal EIC Returns Over $912 Million to Kentucky Taxpayers In 2012, the federal Earned Income Credit put over $912 million into the pockets of Kentuckians, helping families close the gap between what they earn and what it takes to make ends meet.36 For Kentuckians working but still within the grasp of poverty, the EIC helps them pay for basic necessities. EIC recipients may also apply their EIC toward longer-term investments that help them build assets, including savings, education, and housing improvements.37 Individual development accounts offered by communitybased organizations in Kentucky offer matched savings programs to encourage individuals to save at least a portion of their EIC. Kentucky ranks ninth highest among the fifty states in the number of active duty military personnel stationed in the state.38 Additionally, about 27,000 military retirees reside in Kentucky.39 Many active duty and veteran families rely on the EIC to supplement their income. Nationally, about one in four current or former armed forces families with children receive either the EIC or the low-income component of the Child Tax Credit, including 28,000 Kentucky families.40 While about 23 percent of federal tax filers in Kentucky received the federal EIC, the proportion of EIC recipients varied from county to county. For tax year 2011, 35 Kentucky counties had 30 percent or more of tax filers receiving the EIC, with a high of 41 percent in Clay and McCreary Counties. The rate of EIC claims was 15 percent or lower in just three counties. Even in Oldham County, the state’s wealthiest, more than one in ten filers claimed the federal EIC (See Appendix)41.

How Would a State EIC Work in Kentucky? In most states that have enacted a state EIC, the credit is set as a percentage of the federal EIC. This allows the credit to be implemented with little administrative cost. State credits range from 3.5 percent to 50 percent of the federal credit.42 If state policymakers choose 4

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not to model a state EIC as a percentage of the federal EIC, then they must also determine how marital status and family size would affect the size of the credit. Most states with an EIC follow federal provisions in establishing the size of the credit that each family type receives. That is, low-income families with no children, one child, two children, or three or more children receive a certain credit amount. One compelling reason to base a state EIC on the federal credit is its modest administration costs. By having a state credit “piggyback” on the federal credit, state tax agencies often need to add only one new line to a state tax form.43 In addition, many tax filers are already familiar with the federal EIC, and many communitybased outreach efforts, like Volunteer Income Tax Assistance (VITA) sites, are already in place to assure that all eligible families take advantage of the federal EIC. Such efforts would help ensure eligible tax filers know about a state tax credit and take advantage of it too.

Neighboring States with a State Earned Income Credit State

Percent of Federal Credit

Indiana

9%

Illinois

10% Note: The rate increased from 7.5% to 10% on January 1, 2013.

Ohio

5% Note: Enacted 2013. Nonrefundable and limited to 50% of liability for Ohio taxable income above $20,000.

Virginia

20% Note: Non-refundable.

Source: http://www.taxcreditsforworkingfamilies.org/ state-resources/

Enacting a State EIC for Kentucky Enacting a state EIC is a worthwhile investment given the resulting gains to local economies, the

increased workforce participation of adults, and improved workforce preparedness of youth.

Estimated Cost of a State EIC in Kentucky Percent of the Cost Federal EIC

Average EIC/filer

15%

$134.2 million

$337

10%

$89.5 million

$225

5%

$44.7 million

$112

Source: Calculations by Kentucky Youth Advocates based on data from the Brookings Institution.

In 2005, Kentucky established a nonrefundable, family size tax credit (FSTC), which provides income tax relief for individuals and married couples earning less than 133 percent of the federal poverty level. While the FSTC has been valuable to many working families, it does not carry all of the benefits of a state EIC. Since it is not refundable, the FSTC does not supplement wages as a refundable EIC would. A refundable state EIC would provide tax relief to low-income working families who earn slightly more than the current income cutoffs under the FSTC. For example, a family of four with two children with earnings of $14,000 receives a family size tax credit equal to its income tax liability, which lowers the amount of taxes owed to zero. If a refundable state EIC of 15 percent were implemented, the family would receive a credit of $680.44 A refundable state EIC would begin paying benefits quickly – with little administrative cost and without requiring the creation of more governmental infrastructure. By implementing an EIC in Kentucky, thousands of low-income working families would have additional funds to address their immediate needs and, in some cases, more money to put toward achieving long-term economic success. As parents work more and spend their EIC in local communities, a state EIC would strengthen local economies as well.

BLUEPRINT FOR KENTUCKY’S CHILDREN EIC Returns by County, Tax Year 2011 County

Federal EIC Returns

Adair Allen Anderson Ballard Barren Bath Bell Boone Bourbon Boyd Boyle Bracken Breathitt Breckinridge Bullitt Butler Caldwell Calloway Campbell Carlisle Carroll Carter Casey Christian Clark Clay Clinton Crittenden Cumberland Daviess Edmonson Elliott Estill Fayette Fleming Floyd Franklin Fulton Gallatin Garrard Grant Graves Grayson Green Greenup Hancock Hardin Harlan Harrison Hart Henderson Henry Hickman Hopkins Jackson Jefferson Jessamine Johnson Kenton Knott Knox Larue Laurel

$4,709,216 $4,664,450 $4,169,214 $1,706,972 $10,053,460 $3,376,839 $8,530,108 $16,796,826 $4,173,167 $9,121,282 $5,553,069 $1,992,915 $3,903,797 $4,525,561 $13,367,261 $2,703,639 $2,946,907 $5,984,136 $13,620,971 $1,132,345 $2,544,638 $7,104,419 $4,341,810 $18,031,377 $7,569,069 $6,740,697 $3,146,951 $1,676,738 $1,814,275 $19,048,712 $2,870,619 $1,297,736 $4,163,670 $46,683,002 $3,606,660 $9,719,473 $9,461,055 $1,735,823 $1,893,666 $3,595,758 $5,958,184 $8,515,380 $6,242,295 $2,829,879 $7,285,217 $1,437,332 $23,045,107 $7,058,760 $3,805,200 $4,679,000 $9,531,187 $3,032,861 $935,854 $9,404,779 $3,393,740 $154,556,747 $10,169,348 $4,869,920 $27,245,636 $3,616,990 $11,768,547 $3,282,541 $15,486,078

EIC Claims as Estimated State Percent of all Filers EIC Returns* 31% 27% 19% 22% 26% 32% 37% 15% 23% 23% 23% 24% 35% 25% 19% 25% 24% 20% 16% 24% 25% 29% 32% 31% 23% 41% 35% 22% 33% 21% 28% 32% 32% 18% 27% 30% 19% 31% 25% 24% 26% 24% 29% 29% 23% 18% 23% 31% 23% 30% 22% 21% 24% 23% 34% 21% 23% 27% 18% 30% 38% 24% 30%

$706,382 $699,668 $625,382 $256,046 $1,508,019 $506,526 $1,279,516 $2,519,524 $625,975 $1,368,192 $832,960 $298,937 $585,570 $678,834 $2,005,089 $405,546 $442,036 $897,620 $2,043,146 $169,852 $381,696 $1,065,663 $651,272 $2,704,707 $1,135,360 $1,011,105 $472,043 $251,511 $272,141 $2,857,307 $430,593 $194,660 $624,551 $7,002,450 $540,999 $1,457,921 $1,419,158 $260,373 $284,050 $539,364 $893,728 $1,277,307 $936,344 $424,482 $1,092,783 $215,600 $3,456,766 $1,058,814 $570,780 $701,850 $1,429,678 $454,929 $140,378 $1,410,717 $509,061 $23,183,512 $1,525,402 $730,488 $4,086,845 $542,549 $1,765,282 $492,381 $2,322,912

County Lawrence Lee Leslie Letcher Lewis Lincoln Livingston Logan Lyon Madison Magoffin Marion Marshall Martin Mason McCracken McCreary McLean Meade Menifee Mercer Metcalfe Monroe Montgomery Morgan Muhlenberg Nelson Nicholas Ohio Oldham Owen Owsley Pendleton Perry Pike Powell Pulaski Robertson Rockcastle Rowan Russell Scott Shelby Simpson Spencer Taylor Todd Trigg Trimble Union Warren Washington Wayne Webster Whitley Wolfe Woodford Total

Federal EIC Returns

EIC Claims as Estimated State Percent of all Filers EIC Returns*

$3,605,395 $1,869,223 $2,485,680 $5,178,633 $3,619,576 $5,773,114 $1,803,192 $5,966,741 $1,148,307 $13,535,919 $5,165,611 $1,775,211 $15,590,304 $3,027,111 $4,353,214 $5,148,463 $2,618,639 $3,951,592 $6,392,605 $1,726,290 $4,247,201 $2,897,472 $2,856,374 $6,572,607 $3,062,846 $6,545,687 $8,971,010 $1,600,423 $5,229,475 $5,335,022 $2,291,889 $1,256,560 $2,972,914 $7,254,583 $11,388,716 $3,954,473 $14,850,851 $436,597 $4,079,508 $4,382,596 $4,262,824 $8,105,367 $7,182,866 $4,026,912 $2,242,146 $5,802,789 $2,828,400 $2,695,860 $1,844,107 $2,504,069 $23,226,973 $2,288,172 $5,597,251 $2,357,618 $11,014,358 $1,821,968 $3,619,465 $894,571,633

28% 35% 30% 28% 34% 28% 22% 25% 19% 21% 41% 21% 22% 33% 25% 19% 31% 25% 23% 33% 21% 32% 30% 27% 30% 25% 21% 28% 25% 11% 25% 40% 22% 29% 25% 34% 27% 27% 31% 26% 29% 18% 18% 25% 15% 26% 26% 23% 22% 20% 23% 23% 32% 21% 35% 36% 16% 23%

$540,809 $280,383 $372,852 $776,795 $542,936 $865,967 $270,479 $895,011 $172,246 $2,030,388 $774,842 $266,282 $2,338,546 $454,067 $652,982 $772,269 $392,796 $592,739 $958,891 $258,944 $637,080 $434,621 $428,456 $985,891 $459,427 $981,853 $1,345,652 $240,063 $784,421 $800,253 $343,783 $188,484 $445,937 $1,088,187 $1,708,307 $593,171 $2,227,628 $65,490 $611,926 $657,389 $639,424 $1,215,805 $1,077,430 $604,037 $336,322 $870,418 $424,260 $404,379 $276,616 $375,610 $3,484,046 $343,226 $839,588 $353,643 $1,652,154 $273,295 $542,920 $134,185,745

* Estimated at 15% of federal EIC. Source: Calculations by Kentucky Youth Advocates based on data from the Brookings Institution EITC Interactive.

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A STATE EARNED INCOME CREDIT Endnotes 1 Kneebone, E. (2009). Economic Recovery and the EITC: Expanding the Earned Income Tax Credit to Benefit Families and Places. The Brookings Institute. Available at http://www.brookings.edu/ research/papers/2009/01/29-eitc-kneebone. Accessed November 2013.

22 Berube, A. (2006). Using the Earned Income Tax Credit to Stimulate Local Economies. The Brookings Institution. Available at http://www.brookings.edu/~/media/research/files/ reports/2006/11/childrenfamilies%20berube/berube20061101eitc.pdf. Accessed October 2013.

2 Center on Budget and Policy Priorities (2013). Policy Basics: The Earned Income Tax Credit. Available at http://www.cbpp.org/files/policybasics-eitc.pdf. Accessed September 2013.

23 Ibid.

3 Ohio’s 5% state EITC will begin in the 2014 filing season. North Carolina’s 4.5% state EITC will expire after the 2013 tax year. More information about states and local governments with an Earned Income Tax Credit is available at http://www.irs.gov/Individuals/States-and-LocalGovernments-with-Earned-Income-Tax-Credit. Accessed October 2013.

25 Carnevale, A., Smith, N., Strohl, J. (2010). Help Wanted: Projections of Jobs and Education Requirements through 2018. Georgetown University Center on Education and the Workforce. Available at http://www9.georgetown.edu/grad/gppi/hpi/cew/pdfs/State-LevelAnalysis-web.pdf. Accessed September 2013.

4 Eissa, N. and Hoynes, H. (2006). “Behavioral Responses to Taxes: Lessons from the EITC and Labor Supply.” Tax Policy and the Economy, vol. 20, p. 73-110. National Bureau of Economic Research. Available at http://www.nber.org/papers/w11729. Accessed October 2013. 5 Johnson, N. and Williams, E. (2011). A Hand Up: How State Earned Income Tax Credits Help Working Families Escape Poverty in 2011. Center on Budget and Policy Priorities. Available at http://www.cbpp.org/files/4-18-11sfp.pdf. Accessed September 2013. 6 Eissa, N. and Hoynes, H. (2006). “Behavioral Responses to Taxes: Lessons from the EITC and Labor Supply.” Tax Policy and the Economy, vol.20, p. 73-110. National Bureau of Economic Research. Available at http://www.nber.org/papers/w11729. Accessed October 2013. 7 Dahl, M., DeLeire, T., and Schwabish, J. (2009). Stepping Stone or Dead End? The Effect of the EITC on Earnings Growth. IZA. Available at http://ftp.iza.org/dp4146.pdf. Accessed September 2013. 8 Strully, K., Rehkopf, D., and Xuan, Z. (2010). “Effects of Prenatal Poverty on Infant Health: State Earned Income Tax Credits and Birth Weight.” American Sociological Review, vol. 75, no. 4. Available at http://asr.sagepub.com/content/75/4/534. Accessed September 2013. 9 Internal Revenue Service (2013). Statistics for Tax Returns with EITC. Available at http://www. eitc.irs.gov/EITC-Central/eitcstats. Accessed September 2013. 10 Greenstein, R. (2005). The Earned Income Tax Credit: Boosting Employment, Aiding the Working Poor. Center on Budget and Policy Priorities. Available at http://www.cbpp.org/cms/ index.cfm?fa=archivePage&id=7-19-05eic.htm. Accessed October 2013. 11 Tax Credits for Working Families. Working Families Kept out of Poverty by the EITC and CTC, 2009-2011. Available at http://www.taxcreditsforworkingfamilies.org/working-families-povertyeitc-ctc-state/. Accessed October 2013. 12 Annie E. Casey Foundation (2013). KIDS COUNT Data Center. Available at http://datacenter. kidscount.org/data/tables/43-children-in-poverty?loc=19&loct=2#ranking/2/any/true/868/ any/322. Accessed November 2013. 13 Duncan, G. and Magnuson, K. (2011). “The Long Reach of Early Childhood Poverty” Pathways. Available at http://www.stanford.edu/group/scspi/_media/pdf/pathways/winter_2011/ PathwaysWinter11_Duncan.pdf. Accessed September 2013. 14 Dahl, G. and Lochner, L. (2012). “The Impact of Family Income on Child Achievement: Evidence from the Earned Income Tax Credit.” American Economic Review, vol. 102, no. 5. Available at http://dss.ucsd.edu/~gdahl/papers/children-and-EITC.pdf. Accessed September 2013. 15 Strully, K., Rehkopf, D., and Xuan, Z. (2010). “Effects of Prenatal Poverty on Infant Health: State Earned Income Tax Credits and Birth Weight.” American Sociological Review, vol. 75, no. 4. Available at http://asr.sagepub.com/content/75/4/534. Accessed September 2013. 16 Ibid. 17 Annie E. Casey Foundation (2013). KIDS COUNT Data Center. Available at http://datacenter. kidscount.org/data/tables/13-births-to-mothers-who-smoked-during-pregnancy?loc=19&loct= 2#ranking/2/any/true/867/any/10990. Accessed November 2013. 18 Strully, K., Rehkopf, D., and Xuan, Z. (2010). “Effects of Prenatal Poverty on Infant Health: State Earned Income Tax Credits and Birth Weight.” American Sociological Review, vol. 75, no. 4. Available at http://asr.sagepub.com/content/75/4/534. Accessed September 2013. 19 Annie E. Casey Foundation (2013). KIDS COUNT Data Center. Available at http://datacenter. kidscount.org/data/tables/5425-low-birthweight-babies?loc=19&loct=2#ranking/2/any/ true/867/any/11985. Accessed November 2013. 20 Mathews, T. and MacDorman, M. (2012). “Infant Mortality Statistics from the 2008 Period Linked Birth/Infant Death Data Set.” National Vital Statistics Reports, vol. 60, no. 5. National Center for Health Statistics. Available at http://www.cdc.gov/nchs/data/nvsr/nvsr60/nvsr60_05. pdf. Accessed April 2013. 21 March of Dimes. Low Birthweight. Available at http://www.marchofdimes.com/professionals/ medicalresources_lowbirthweight.html. Accessed November 2013.

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24 Data on 2011 EITC returns from the Brookings Institute, analyzed by Kentucky Youth Advocates.

26 Data obtained from the U.S. Census Bureau, 2012 American Community Survey, Table S1501: Educational Attainment, Kentucky. Available at http://factfinder2.census.gov/. Accessed November 2013. 27 Center on Budget and Policy Priorities (2013). Policy Basics: The Earned Income Tax Credit. Available at http://www.cbpp.org/cms/index.cfm?fa=view&id=2505. Accessed September 2013. 28 National Community Tax Coalition (2012). The Earned Income Tax Credit: Good for Our Families, Communities and Economy. Available at http://www.taxcreditsforworkingfamilies.org/ wp-content/uploads/2012/01/NCTC-EITC-paper_Jan2012.pdf. Accessed September 2013. 29 United States Conference of Mayors (2008). Dollar Wise Best Practice: Earned Income Tax Credit, 2nd ed. Available at http://usmayors.org/dollarwise/resources/eitc08.pdf. Accessed September 2013. 30 Institute on Taxation and Economic Policy (2013). “Kentucky State and Local Taxes.” Who Pays? A Distributional Analysis of the Tax System in All 50 States (4th Edition). Available at http://www. itep.org/pdf/ky.pdf. Accessed November 2013. 31 Dowd, T. and Horowitz, J. (2011). “Income Mobility and the Earned Income Tax Credit: ShortTerm Safety Net or Long-Term Income Support.” Public Finance Review, vol. 39, no. 5. Available at http://pfr.sagepub.com/content/39/5/619.abstract. Accessed October 2013. 32 Marr, C., Charite, J. and Huang, C. C. (2013). Earned Income Tax Credit Promotes Work, Encourages Children’s Success at School, Research Finds. Center on Budget and Policy Priorities. Available at http://www.cbpp.org/cms/?fa=view&id=3793. Accessed October 2013. 33 Internal Revenue Service (2013). IRS Form 1040 (2013 Draft), 2013 Earned Income Credit (EIC) Table. Available at http://www.irs.gov/pub/irs-dft/i1040tt--dft.pdf. Accessed October 2013. 34 Tax Policy Center (2013). “Taxation and the Family: What is the Earned Income Tax Credit?” The Tax Policy Briefing Book. Available at http://www.taxpolicycenter.org/briefing-book/keyelements/family/eitc.cfm. Accessed November 2013. 35 Ibid. 36 Internal Revenue Service (2013). Statistics for Tax Returns with EITC. Available at http://www. eitc.irs.gov/EITC-Central/eitcstats. Accessed September 2013. 37 Johnson, N. and Williams, E. (2011). A Hand Up: How State Earned Income Tax Credits Help Working Families Escape Poverty in 2011. Center on Budget and Policy Priorities. Available at http://www.cbpp.org/files/4-18-11sfp.pdf. Accessed September 2013. 38 Kentucky Commission on Military Affairs (2012). The Economic Importance of Military Activity in Kentucky: 2012 Update. Available at http://kcma.ky.gov/economicImpact.htm. Accessed November 2013. 39 Ibid. 40 Sherman, A. (2013). Working-Family Tax Credits Help Over 1 Million Military Families. Center on Budget and Policy Priorities. Available at http://www.cbpp.org/cms/index. cfm?fa=view&id=3986. Accessed November 2013. 41 Calculations by Kentucky Youth Advocates based on data from the Brookings Institution EITC Interactive. 42 Tax Credits for Working Families (2013). States with EITCs. Available at http://www. taxcreditsforworkingfamilies.org/earned-income-tax-credit/states-with-eitcs/. Accessed October 2013. 43 Center on Budget and Policy Priorities (2012). Policy Basics: State Earned Income Tax Credits. Available at http://www.cbpp.org/files/policybasics-seitc.pdf. Accessed November 2013. 44 Meade, E. and Ziliak, J. (2007). A State Earned Income Tax Credit. University of Kentucky Center for Poverty Research. Available at http://www.ukcpr.org/Publications/PolicyInsightsNo2.pdf. Accessed March 2012.