Key Tax Credits Help Working Fathers and Boost Maryland Economy

The approach of  Father’s Day is a good time to recognize the importance of two key tax policies that help working dads support their families and build a better future.

The federal Earned Income Tax Credit and Child Tax Credit  have proven to be very effective tools to help make sure children get a good start in life. We need to work together to expand these policies so more Americans get the support they need. In 2012, the most recent year for which statistics are available, 13 million fathers claimed one or both of these credits nationwide. In  Maryland, 181,000 working fathers claimed these credits — receiving much-needed support to many families that struggle to get by.

The EITC is  for working people in low-pay jobs. The credit, in effect, reduces the amount of taxes a family owes as it works its way up the economic ladder.  The average size of the credit is about  $2,800 a year for a family with children and $280 for a family without children.

Similarly, the CTC enables eligible taxpayers to be credited up to $1,000 for each dependent child under age 17. Unlike the EITC, the Child Tax Credit is available to middle-income families.

The economic boost families get from these tax credits has been shown to correlate directly with their kids doing better in school. For every $1,000 increase in annual income over two to five years, children’s school performance improves on a variety of measures, including  test scores. A credit  worth about $3,600 during a child’s early years may boost his or her achievement by the equivalent of about two extra months of schooling, according to the Center on Budget and Policy Priorities.

These tax credits provide an immediate return on investment by effectively combating today’s vast educational disparities. And they help over the long term, too. Students who fare better educationally  are more likely to go to college and have higher lifetime earnings. These variables ultimately provide greater opportunities for future generations to succeed in life.