Addressing the Goals of
Economically Self-Sufficient Families
With the help of the Annie E. Casey Foundation, Baker, Greene, and Warren
counties conducted an initiative for their county’s working families living in
poverty, or living close to the poverty line. This initiative focused on four activities:
1. Providing outreach and education about the benefits of the Earned
Income Tax Credit (EITC);
2. Preserving the value of the EITC by providing and supporting free tax
3. Developing activities focused on assisting individuals in building personal
assets. These activities include linking working individuals and families
with financial institutions, providing training in financial literacy, assisting
individuals with setting financial goals for education and training, and
moving individuals towards home ownership; and
4. Stimulating the local economy with the strengthened purchasing and
saving power of families and individuals benefiting from the EITC.
All, or portions, of this initiative are suitable for rural counties interested in
addressing the result area of “Self-Sufficient Families.
Although the entire community can benefit from one or more activities in this
initiative, the largest gains can be made by reaching out to working families at or
near the poverty line.
The first target group that may come to mind for many counties are those families
involved in the Family Connection Targeted Case Management Program for
Medicaid-eligible children at risk. But it is important to note that many workers
who provide services for this population might also be eligible for this federal tax
credit. Many individuals work full time at jobs that provide a relatively low level of
income. A recent sample by the Brookings Institution Center on Urban and
Metropolitan Policy indicated that Georgia workers in the following job categories
are often eligible for the Earned Income Tax Credit:
Cooks School bus drivers
Dental assistants Security guards
Janitors Social workers
Pre-school teachers Travel agents
The EITC — what is it?
Individuals who work — especially those who work year long — should not have
to live below the poverty level. The Earned Income Tax Credit, enacted by
Congress in 1975, is a special tax benefit for working people who earn low to
moderate wages. Workers who qualify for this benefit, and file a federal tax
return, can get back some or all of the federal income tax that was taken out of
their pay during the year. And, they may also receive extra cash back from the
Internal Revenue Service (IRS).
The EITC has several important benefits:
It reduces taxes for these workers,
It supplements wages by reducing income inequality,
It makes work more attractive than welfare, and
It helps low income families build assets.
The EITC has a direct impact in terms of reducing poverty. In 1999, nationally,
the EITC lifted 4.7 million people out of poverty, including 2.5 million children—
more than any other federal aid program. (Brookings, 2001a)
Who benefits from the EITC?
According to the U.S. Department of Treasury, those who benefit are:
Working families with children. Children are more likely to be poor than
Americans of any other age group. The largest EITC benefit is for working
families with two or more children.
Low-income workers, even if they do not have a qualifying child. This credit
provides a financial boost to people who work at very low wages or are only able
to find part-time work.
State and local economies. EITC participation boosts state and local
economies. In the first eight months of 2001 alone, nearly $31 billion in federal
EITC funds flowed into the states. Since most EITC benefits are spent locally, the
EITC is an economic development tool for low income neighborhoods. By
increasing the income of low-wage earners, the EITC can reduce the demand for
some public services and benefit programs provided by state and local
Can the EITC impact my county?
Yes. The data for the state makes a convincing argument for the positive role
EITC can play. In the late1990s in Georgia “the average before-tax income of a
family in the bottom fifth of the income distribution was around $11,500. Adjusted
for inflation, these families were actually earning 6 percent less than they were
during the late 1970s” (Brookings 2001a).
The Georgia Rural Development Council, in its January 2000 report The State of
Rural Georgia: ‘Surviving, not Thriving’ noted that only 50 of Georgia’s counties
were either developing or rapidly developing. Of the rural counties, approximately
50 are categorized as either lagging or declining.
In terms of dollars, the federal Earned Income Tax Credit delivered over $30
billion to 18.4 million low income families across the U.S. in the 2001 tax year
In studies cited by the Brookings Institution, “between 1993 and 1999, the
number of families receiving the EITC increased by 29 percent. The number of
people lifted out of poverty by the EITC increased by 124% over the same time
And, you do not have to serve large numbers of individuals to make a difference
at a county level. Baker County, with a population of 4,074, provided free tax
preparation services to 50 individuals and brought a total of $44,018 dollars back
into their county. Of this amount, $25,747 went to EITC recipients. Warren
County, with a population of 6,336, served 52 individuals and brought in $66.780
in federal refunds, of which $37,243 went to EITC recipients. And those EITC
filers were all saved the cost of tax preparation, putting approximately an extra
$100 or more back into the pockets of low-income, working, families. And
because they filed electronically, they received their tax refunds as quickly as if
they had used a paid preparer.
And unlike many windfalls people may receive, most of these dollars are spent in
the recipient’s community.
What services does the EITC provide?
Free Tax Preparation. Offering free tax preparation services for low to moderate
income residents is both rewarding and challenging. Time is of the essence for
organizing and implementing this activity in time for the next tax season.
Plans for the site must be solid enough by October to be assigned an Electronic
Filer Identification Number in order to transmit the returns electronically. Potential
workers need to receive training during November or December in order to be
ready for filing in January. Publicity for the site needs to be done in December (or
earlier) to ensure individuals eligible for the EITC, and who normally visit paid
preparers, take advantage of your site.
Financial Literacy. Financial literacy is assisting people of all ages to become
knowledgeable about the many facets of money management — from
understanding the deductions in their pay check, to the importance of developing
a good credit history, to planning for future purchases, such as a home.
Wachovia Bank, which has a representative on the Family Connection
Partnership board, and United States Department of Agriculture Rural
Development can both provide assistance to counties with this effort. Both are
providers of the Federal Deposit Insurance Corporation’s (FDIC) Money Smart
financial literacy curriculum. In fact, the USDA Rural Development has recently
been given a mandate to deliver the FDIC curriculum in rural areas and is
actively seeking partners in this work.
In addition to these partners, the Georgia Cooperative Extension Service, which
is represented on many local collaborative boards, has its own financial literacy
curriculum called Gateway.
Greene County used materials from both the FDIC and the Cooperative
Extension Service in their recent classes. In addition, Greene County also made
use of local resources to address retirement, bankruptcy, and payroll deductions.
Personal Asset Building. The most important single asset an individual may
acquire during their lifetime is a house. But there are other types of assets
workers may aspire to, as well. Increased educational attainment is one, and
improved personal transportation could be another.
Where can I find additional information about the EITC?
For additional information about the EITC please contact Diane Cousineau. She
can be reached at firstname.lastname@example.org, or at 423-596-0978.
Alan Berube and Benjamin Forman. (2001a). Rewarding Work: The Impact of the
Earned Income Tax Credit in Greater Columbus, GA. Washington, D.C.:
Brookings Institution Center on Urban and Metropolitan Policy. See also other
Georgia cities in this series.
Alan Berube and Benjamin Forman. (2001b). A Local Ladder for the Working
Poor: The Impact of the Earned Income Tax Credit in U.S. Metropolitan Areas.
Washington, D.C.: Brookings Institution Center on Urban and Metropolitan
Georgia Rural Development Council Technical Advisory Committee. (2000). The
State of Rural Georgia: ‘Surviving, not Thriving.’ Atlanta: Georgia Rural