TBF Policy Update: Support for Allocating ARPA Funds for EITC Expansions

In early October, the Boston Foundation submitted testimony to the Joint Committee on Ways and Means, urging them to allocate a portion of the American Rescue Plan Act (ARPA) funds to programs that reduce poverty and support immigrants and low-income families - particularly the Earned Income Tax Credit. Keith Mahoney, Vice President for Communications and Public Affairs, submitted the testimony. He cited data from Children’s HealthWatch and the census that shows families who are struggling to cover basic household expenses are overwhelmingly those of color and those with low and moderate incomes, and that past EITC expansions have had positive impacts on these families.

Chairman Rodrigues, Chairman Michelwitz, and distinguished members of the Joint Committee on Ways and Means:

On behalf of the Boston Foundation, we strongly urge the Committee to allocate a portion of the federal American Rescue Plan Act funds to programs that alleviate poverty and support families with low incomes in the Commonwealth. Specifically, we urge the Committees to use funds to increase the state match of the Earned Income Tax Credit (EITC) to 50 percent of the federal credit, and to expand EITC eligibility to immigrants who file taxes with an Individual Tax Identification Number (ITIN).

As Greater Boston’s community foundation for more than 100 years, the Boston Foundation’s mission is to build and sustain a vital, prosperous city and region for all. Through our grantmaking and partnerships we have invested millions of dollars in programs and policies that uplift our communities and address inequities. During this last year, we have seen the impact of a health and economic crisis. Empowering families and the local economy should be top priorities for the Commonwealth.

We believe the ARPA funds provide a significant opportunity to address longstanding inequities that led to the disproportionate impact of COVID-19 by investing in anti-poverty programs that support communities most affected by the economic fallout of COVID-19 – specifically Black, Indigenous, people of color (BIPOC), immigrant families, and families with low incomes – as is intended. Currently, the state has an opportunity to increase the Massachusetts EITC’s availability, size, and participation to reduce disparities among low-income children and families in Massachusetts – and especially among BIPOC and immigrant families.

Recent census data shows that still, in Massachusetts, 7 percent of families – including 7 percent of those with children – do not have enough to eat, 10 percent are behind on rent, and 23 percent report difficulty covering usual household expenses. These families are overwhelmingly those of color and those with low and moderate incomes. Changes to the EITC would directly support these families still struggling to make ends meet. Federal and state EITCs offer a tax break for low- and moderate-income working families that boost their financial resources and help alleviate economic hardship.

Expansions to the EITC have historically had a larger net positive impact for people of color – particularly Black and Latinx families. Permanent expansions to the EITC are critical for improving current and future health, especially as the economic crisis created by COVID-19 disproportionately pushed low-income families, immigrants, and communities of color deeper into poverty, with lasting impacts on health inequities. Given this evidence, coupled with the documented health and economic benefits of the EITC, an investment to increase the EITC match to 50 percent and to extend the credit to immigrant workers who file taxes with an ITIN is a promising strategy to support families most impacted by the pandemic, and to save the Commonwealth future costs.

As you explore ways to spend federal dollars while addressing the needs of the Commonwealth, we strongly urge you to invest this small relative portion of the ARPA funds to increase the EITC rate to 50 percent, and to expand eligibility for the credit to immigrants who file taxes with an ITIN.

Among the tools the Boston Foundation uses to support the work of our nonprofit partners and achieve our mission of “building and sustaining a vital, prosperous city and region, where justice and opportunity are extended to everyone” is advocacy for public policy. As part of that advocacy work, Boston Foundation representatives occasionally testify on Beacon Hill and elsewhere in support of local initiatives. Our occasional “TBF Policy Update” posts share our work in public affairs, with updates, letters and relevant testimony.