Congressman Carney and Wilmington City Council President Gregory Express Support for the Earned Income Tax Credit Campaign

Posted on  01/25/2013 10:06 am

Delaware Congressman John Carney, Wilmington City Council President Theopalis Gregory and 3rd District Council Member Darius Brown today joined with fellow Council Members and community representatives at a news conference in Wilmington to help kick-off the Earned Income Tax Credit (EITC) Campaign. The 11th annual Delaware campaign is coordinated throughout the state by the Nehemiah Gateway Community Development Corporation (NGCDC) whose President is Reverend Clifford Johnson, Pastor of Shiloh Baptist Church in Wilmington.

The objective of the campaign is to educate citizens about the EITC, prepare taxes for those who qualify and encourage sound financial management and savings. EITC is based on the amount of money earned through a job. The Earned Income Tax Credit benefits families who earn less than $45,060 (with three or more children) per year. The tax credit that citizens can receive could be as much as $5,891 depending on family size and income.

FREE tax preparation sites are open to help families assess whether they are entitled to the tax credit and to assist with the preparation of their tax returns, opening bank accounts and accessing information about other services available to citizens of the state.

“The Earned Income Tax Credit helps working families keep more of what they earn, and brings millions of dollars back to Delaware’s economy. Yet, every year, close to 20% of eligible Delawareans do not file for it,” said Congressman Carney. “The Delaware EITC Campaign reaches out to Delaware residents, helps them file their taxes, and teaches them how best put that money to use. I’m hopeful that every eligible Delawarean takes advantage of this opportunity. In many cases, it makes the difference between getting by and getting ahead.”

“Wilmington City Council Members are eager to assist with this year’s campaign by reaching out to eligible Wilmington residents and urging them to take advantage of the EITC,” said Council President Gregory. “Each year, more and more people in Wilmington and around the State are claiming a tax credit that is rightfully theirs and are receiving the added benefit of FREE tax preparation. We know that financial pressures are all around us, so it makes sense for citizens to be able to generate additional income for their families with very little effort. It is easy to obtain information and guidance about the EITC and we urge citizens to take notice and take action.”

According to Reverend Johnson who is President of NGCDC, the EITC increases the ability of workers in lower paying job categories to support themselves and their families. He said research clearly shows that by helping a person reap additional tax benefits based on the amount they earn has increased the labor force participation of lower skilled workers, especially single mothers.

Reverend Johnson said during the 35-year history of the EITC, more children have been lifted out of poverty through the EITC than any other social program or category of programs. Without the tax credit, he said, the poverty rate among children in the United States would be 25% higher. The EITC has reduced participation in welfare and food stamps, and reduced the housing affordability burden of low income households.

The Nehemiah Gateway Community Development Corporation has trained 400 volunteers to prepare taxes at 22 sites throughout the state. There are seven locations in Wilmington.

Council Member Darius Brown said the IRS estimates that approximately 20% of eligible workers do not claim the EITC. In tax year 2012, EITC returned over 90 million dollars of federal money to eligible Delawareans. The Council Member said the EITC funnels billions of dollars into low income communities, both urban and rural, in the form of consumer spending and asset building. Research shows there is even a modest flow of state and local tax revenue generated.

For all these reasons the Nehemiah Gateway Community Development Corporation (NGCDC) has used volunteers and donation supported staff to provide free tax counseling and filing and access to financial products and services to EITC eligible low income households throughout Delaware for the past ten years.

Reverend Johnson said the results from last year’s NGCDC’s campaign are significant. Almost $15 million of 2011 Federal refunds were claimed from returns prepared by NGCDC’s 375 volunteers. This included $6.3 million in EITC credits. Conservatively, the total economic impact of the refunds exceeds $24 million. These impacts were throughout the state as nearly one out of every two returns filed were from households living in Kent and Sussex Counties.

More than one-half of the filers had 2011 income of $15,000 or less, and two-thirds were females. Over eight out of ten filers were African-American or Latino. NGCDC had Spanish speaking staff at many tax sites. Over 9,000 children were reached. More than nine out of ten clients planned to use their refund to pay bills for things such as utilities (e.g., electricity, telephone service) or medical care. More than one-third planned to save some of the money. The remainder goes to the purchase of food, clothing, car repairs or rent.

Since private companies such as H&R Block are available to file EITC returns, is the volunteer service provided through NGCDC really necessary? By having readily accessible sites in low income communities throughout Delaware, and in all the state service centers, NGCDC reaches households that might otherwise not be aware of the EITC program.

The latest data shows that despite having similar poverty rates, more than 8% of Delaware’s EITC returns were filed through volunteers compared to 1% - 3% in surrounding states. More importantly, proportionately more households in Delaware applied for the EITC than in the surrounding states (i.e., 16% of filers in Delaware compare to 13% in surrounding states).

Research also shows that a low income person least likely to file for the EITC is a person who never filed a return before, has less education, and has a language challenge. Almost 30% of the returns completed by NGCDC this tax season were for persons who did not file taxes last year. Over 70% of the NGCDC filers have a high school diploma, a GED, or did not graduate from high school. As mentioned, Spanish speaking staff was available at almost all the NGCDC sites.

Another important value-added from the NGCDC is the financial literacy and empowerment services offered at the tax sites. Volunteer tax preparers are trained in the basics of financial literacy and there were three paid financial coordinators who rotated among the tax sites.

The results were the opening of 370 new checking and savings accounts, 20 referrals to the “Stand By Me” financial empowerment services, and 300 more requests for financial education from NGCDC. In addition, 50 clients used the free credit reporting services offered at three sites and over 10,000 Financial Resource Booklets were distributed. If funding permits, NGCDC hopes to add an additional three paid financial coordinators for the next tax season.

None of this would be possible, of course, without the dedication of hundreds of volunteers and donations from financial institutions, foundations, and the United Way. While the typical private firm charges at least $200 per return filed, NGCDC spends $44 of staff time per return…including financial counseling. This is because trained volunteers provide more than $2.0 million of tax services.