A $15 minimum wage in New York state aims to eliminate low-income poverty, but Earned Income Tax Credits could be the solution without the added financial consequences to employers.
Farmers and other private employers in the north country have said a $15 minimum wage could cause their businesses to move out of state or resort to decreased employment. New York Air Brake, based in Watertown, could move its train brake manufacturing out of state, and farmers already are starting to use robotic equipment to maintain farms instead of employing workers.
The Empire Center recently released a study about the EITC’s effectiveness versus a $15 minimum wage, noting that combined income from state and federal income tax credits, along with other programs such as food stamps, can bring a single parent’s annual income from about $18,000 per year on a $9 wage job to about $30,000 per year. The report also notes that the EITC specifically targets those who are in need of extra income, whereas a $15 minimum wage would increase income for those who do not need it.
The EITC is nothing new, however. The federal EITC was established in 1975, and New York state followed with its own EITC in 1994.
Of the annual tax returns handled by the Jefferson County Department of Social Services, about 80 percent receive a credit of some amount, according to Tama Pester, principal social welfare examiner.
The only needed step in collecting the credit is to file and claim a federal tax return. A list of requirements needed to apply for the credit can be found on the Internal Revenue Service website. The credit amount is then attached to the tax return.
Ms. Pester said the amount of money one can receive from the federal income tax credit depends on adjusted gross annual income.
To qualify for the federal tax credit, an individual has to make less than about $47,000 per year. If married and filing jointly, total yearly income must be about $53,000 or below.
The amount of money received by the credit is then broken down by how many children a single individual or married couple has. Ms. Pester said that with three or more children, the credit could amount to $6,242. With two children, $5,548, and with one child, $3,359. Those single without children can receive about $500. As income increases for an individual or couple, the maximum amount that can be received decreases.
As far as the state income tax credit goes, Ms. Pester said it usually amounts to about 30 percent of the federal credit amount received, which is added on top of the federal amount.
Ms. Pester said people seeking extra income to solve financial burdens are generally surprised about how much they can receive through the credits.
“The more you work, the more your credit will be,” she said. “We have people who are surprised by how much they are getting back. I don’t think people are aware of the credits you can get.”
While the money is not as immediately available as it would be under a $15 minimum wage, Ms. Pester said, the federal income tax credit is the most ideal way for low-income workers to stay financially above water.
“It’s the credit that is most beneficial to the clients and will get them the most back on their return than any of the credits,” she said.
Those with children can also receive additional Child Tax Credits. Taxpayers could receive $1,000 per child between ages 4 and 17. Even if a single parent is not employed and paying income tax, Ms. Pester said, he or she can still receive $100 per child.
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