Ruble: Best economic strategy for SC: refundable tax credit

Growing up in poverty can have damaging effects on children. The estimated 285,000 children in our state living in poverty are likely to have lower school performance, higher rates of chronic health problems stemming from damaging levels of stress on the brain, and an increased reliance on public assistance later in life.

The web of trauma linked to poverty — hunger, unstable housing, higher rates of maternal depression — harms children’s health well into adulthood.

The fight to provide and maintain basic needs puts a significant amount of stress on both parents and children. This stress, especially when experienced early in life and without sustained, supportive relationships and environments, can impede the brain’s ability to form impulse control, decision-making and working-memory skills that are necessary for long-term success in school and in the workforce. These skills are the foundation for higher-order reasoning, problem-solving and creative-thinking skills. That’s why it’s important to have early and sustained intervention to support families and prevent these negative outcomes.

The federal Earned Income Tax Credit is one of the most successful anti-poverty programs in the county. The refundable credit, offered to working poor families, has wide bipartisan support, and it has such a positive impact on families and the economy that 26 states and the District of Columbia offer state credits as well.

Now is the time for South Carolina to do the same.

The credit incentivizes work. Each additional hour of income translates into a higher credit amount (up to a maximum limit). If the credit is higher than a family’s tax liability, the IRS refunds the difference. A family’s credit amount depends on marital status and the number of children, but in 2013, families who benefited from the federal program received an average of an additional $250 each month. Numerous studies confirm that families who receive this benefit typically use the income supplement to pay bills, meet basic needs and pay for other expenses that allow them to work, like car repairs or more reliable child care.

In recent years, such prominent conservatives as U.S. House Speaker Paul Ryan and American Enterprise Institute President Arthur Brooks have encouraged expanding the credit. Why? It has shown such strong, positive, short- and long-term benefits for children and families.

When families in poverty experience a modest increase in income, they benefit significantly. Even a $1,000 annual increase in income is associated with improved health outcomes, increases in reading and math scores and increased rates of high school graduation and college enrollment. When families are able to meet basic needs, parents can better sustain and support a stable, nurturing home environment, children are more prepared for school success, and the state pays less in social-welfare costs.

South Carolina has a significant economic need for a better educated society. Economists predict the education levels needed for the thousands of new jobs our state economy will provide by 2020 will far exceed the levels of education we as a state currently have. We need more and better participation in our economy.

A refundable state Earned Income Tax Credit lays a better foundation for healthy child development and builds economic security for South Carolina; that’s good for children and families. And a healthier, better educated and competitive workforce will support a stronger and more productive state economy.

Seems like a win-win.

This story was originally published January 12, 2016 at 3:16 PM with the headline "Ruble: Best economic strategy for SC: refundable tax credit."