Colorado working families need relief and the expansion of the earned income tax credit is it. As a working single parent tax season has always come a little too late. It is the time I can get caught up on bills, a time I didn’t have to drastically budget my groceries, a time I could consider extravagant things, like — a zoo membership, a museum membership, fixing my car, a soccer jersey for my son or birthday presents for his next birthday in September.
The earned income tax credit is for working families and individuals who have earned a low to moderate income, and it reduces the amount of tax you owe, while also providing you with an extra $300-$500 at the end of tax season.
My son is 4, and throughout the years the things I have bought with the earned income tax credit have changed as my income has changed. For example, there were times I made a very low income, and I qualified for safety net programs — like the Child Care Assistance Program, income-based rent, or at one point, food stamps. In those years I often spent the earned income tax credit on fixing my car, getting caught up on other bills, a zoo-membership, or other recreational things so that my kiddo could experience the enrichment activities that kids of higher-income households could.
As I slowly climbed the income ladder and lost the benefits of safety-net programs, because of income increase, living costs rose too. For example, I went from spending nearly $300 on child care monthly when I made less than $38,000 annually, to spending $1,480 a month on child care once I started making over $42,000. All of a sudden, in those years my earned income tax credit would now be spent on basic needs — child care. At this time I was spending $17,760 a year on child care, which at one point was over half my income.
Families like mine go into debt to pay for early child care and often have to either move their children to more affordable situations, or patch together child care by getting a mixture of family, friend and neighbor care and or a couple of hours of preschool in a facility weekly. Our tax returns go to these basic needs often, even as moderate-income earners.
I have yet to achieve what is considered the livable wage for a single parent with a young child — scaled at $29.69 an hour for Denver residents. I make just shy of 70% of the average median income for a Denver single parent, one-child household in 2020. The point of sharing all this vulnerable information is to say that I represent a large portion of Coloradans. According to a study in 2018 more than three out of five single mothers (62%) lack adequate income in Colorado.
What single parents need to get state by state can vary. For example, in Colorado, a single parent needs to earn close to $58,000 annually to “simply get by” with one young child.
Last fall, Fair Tax Colorado fought for a fair tax code through a ballot initiative that would have repealed the flat tax rate, and created a graduated income tax rate. What this means is much higher income earners are taxed at a similar rate that my single parent — low moderate-income — is taxed. They fought to make our tax code more equitable, so families like mine can get relief and so that the state could generate more revenue post-economic collapse.
But some progress has been made, in the 2020 legislature, House Bill 1420 expanded Colorado’s earned income tax credit from 10% to 15% of the federal earned income tax credit, and starting in 2022 immigrant tax filers will be eligible for the state earned income tax credit for the very first time. But there is still a lot of progress needed to create a fair tax code in Colorado and support working families like mine.
With the extraordinary stress of the pandemic families like mine need relief in any way we can get it. In the current legislative session, we will see the opportunity to expand the earned income tax credit again. While this is only one immediate solution — families like mine need it. A few hundred extra dollars can make all the difference in the world for families to simply stay afloat.
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