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Missouri lawmakers should make it easier to access Earned Income Tax Credit


Missouri lawmakers should make it easier to access Earned Income Tax Credit

Jun 21, 2024 | 6:50 am ET
By Peter Gariepy
Missouri lawmakers should make it easier to access Earned Income Tax Credit
The Missouri state flag is seen flying outside the Missouri State Capitol Building on Jan. 17, 2021 in Jefferson City (Michael B. Thomas/Getty Images).

Missouri’s 2024 legislative session recently concluded, and the 2025 session is seven months away. With significant turnover in both chambers, next year’s lawmakers can deliver easy and affordable wins by ensuring all who are eligible for public assistance actually enroll to receive those benefits.

To narrow the gap between eligible and enrolled, incoming state lawmakers should make it as easy as possible for eligible Missourians to locate and access a multi-lane road to a more affordable life — one lane for state-administered benefits and one for federal benefits.

Our state’s public assistance programs do not always reach the eligible individuals and families they are intended to serve. This past February, The Independent reported that food benefits for approximately 90,000 children went unclaimed, despite the best efforts of the Missouri Department of Social Services. These benefits going unused by eligible children results in poorer nutrition, contributing to impaired overall health, reduced academic performance, and an increased likelihood of lower lifetime earnings.

The federal Earned Income Tax Credit (EITC) is another example of an underutilized benefit for lower-income people. A proven mechanism for reducing poverty, the EITC is under claimed by 22% of eligible families nationwide, according to a March 2022 report from the Federal Reserve Bank of Chicago.

At 22.7%, the percentage of eligible Missouri households not claiming the EITC exceeds the national average.

Closing the distance between those eligible for public assistance and those receiving it is the focus of a research collaboration that includes The People Lab at Harvard University’s Kennedy School of Government and the California Department of Social Services. Seeking to improve the eligibility-enrollment gap, researchers are designing and testing approaches that lead more low-income households to claim beneficial tax credits, such as the EITC.

The most common reason for not claiming the EITC is not meeting the income threshold that triggers the requirement to file a federal income tax return. The EITC’s value grows in the 31 states, including Missouri, that offer their own EITC program through claiming the federal credit.

For 2023, around 415,000 Missouri filers claimed the EITC, resulting in $1.1 billion in EITC refund dollars flowing into the homes and local economies of working Missourians. By providing those who are already eligible with more personally useful information that leads to action, an additional $230 million influx of federal EITC dollars could flow into our state and into the hands of those most in need every year.

Filing an annual income tax return will become more accessible through the announced expansion of the IRS’s Free File program for those with adjusted gross income of $79,000 or less.

As of September 2023half of American households were not accessing the benefits to which they were entitled. Harvard Kennedy School Professor Elizabeth Linos has stated the root challenge is “how to target and hopefully overcome the underlying stigma and shame associated with being on government assistance, within specific populations.”

Those barriers of stigma and shame can be lowered with nudging, a concept by which decision-making is subtly influenced without coercion. In their 2009 book, Nudge, University of Chicago professors Richard Thaler and Cass Sunstein argued for “self-conscious efforts, by institutions in the private sector and also by government, to steer people’s choices in directions that will improve their lives.”

Missouri lawmakers can leverage nudging through targeted and iterative outreach to residents who have already been in contact with social service providers, utility assistance programs, public health clinics, libraries and during annual enrollment for children in public, private and home school settings. Outreach strategies should emphasize an application’s and program’s privacy and data security to increase user comfort and confidence.

The ongoing research into more effectively connecting eligible families with public benefits should spark and hold the interest of Missouri’s incoming lawmakers, who will have the advantage of a clean slate and operating in a non-election year. Given the pervasive under-delivery of public services, increasing the comfort and understanding of claiming benefits can improve well-being and economic stability across lower-income communities statewide.

In the long run, everyone in Missouri, including politicians, will benefit from federal and state assistance making life more affordable for as many eligible Missourians as possible. Our incoming state legislators should embrace the privilege before them to bring support closer to those among us in need of firmer ground.