Last weekend, 45 faith leaders signed a letter encouraging President-elect Biden to include expansion of low-income tax credits in his soon-to-be-released COVID-19 relief package. You can read the letter and see who signed here. 

“Of the many challenges you face, one of the most urgent is helping all Americans emerge from the chaos, despair, and economic devastation wrought by the coronavirus-19 pandemic,” the letter states. “The pandemic has caused untold economic devastation to millions of Americans, particularly Brown and Black Americans, and while there are many policy options at your disposal we believe that expansion of the Earned Income Tax Credit (EITC) and the Child Tax Credit (CTC) can play an instrumental role in assisting millions of Americans struggling to make ends meet. For decades, these refundable tax credits have been critical tools in the effort to reward work, support families and lift millions of our fellow citizens out of poverty.” 

Specifically, the letter lays out three recommendations: 

Expand the EITC for low-wage, childless workers. The letter notes that the EITC promotes work and supports low-wage workers. However, it points out that too many workers – particularly older and the youngest adult workers – do not benefit at all from the EITC. Adult workers without dependent children receive only a small EITC, leaving them taxed into or further into poverty. 

Make the CTC fully refundable. The letter states that the CTC provides a $2,000 credit per child to eligible families. However, the CTC fails to cover nearly 26 million children whose families fail to qualify for this full amount or no credit whatsoever because they have too little or no earnings. Half of Black and Latinx households are shut out of receiving the full credit. This problem could be addressed by making the credit fully refundable – meaning all children qualify for the full credit. Increasing the credit – along with a larger credit for children under 6 years of age, will help provide much-needed assistance at a time when families are struggling. 

Provide a robust earned income lookback. The letter notes that the recent COVID-19 relief package provided a “look back” for tax year 2000. Doing so enables workers to do what corporations are already allowed to do under the current tax code – endure sudden changes in income. The lookback option allows filers to use their 2019 wages – instead of 2020 wages, impacted by COVID-19 – when calculating their EITC and CTC benefit. Given that 2021 will be tough for workers, another two-year lookback – which would cover 2021 – is warranted. 

You can view the letter in its entirety here.