Can EITC be a tool for poverty alleviation or wealth building in Fairhill?

Ceiba is joining forces with APM, Congreso, Esperanza, HACE, and the Norris Square Community Alliance to bring to scale the use of free tax preparation as a gateway to connect residents of Fairhill/Kensington, and other parts of eastern North Philadelphia, to programs and income supports for which local families are eligible.

Will Gonzalez, executive director of Ceiba, said the EITC and accompanying free Volunteer Income Tax Assistance (VITA) that Ceiba provides to the community is an important tool for poverty alleviation. It reduces poverty by supplementing the earnings of low-wage workers and rewarding work. It is the largest poverty alleviation program in the US.

Gonzalez said Ceiba uses it as a gateway to asset-building. “Income tax forms provide a unique vista to a family’s finances. When we go over their tax forms, we help households figure out their eligibility for programs and income supports,” he said.

From a distance this looks easy, but it is demanding work.

Will Gonzalez. (Ceiba website)

“We need to develop systems to ensure warm and effective connectivity between the free tax prep and the comprehensive set of public benefits, subsidies, supports, and resources provided by this group of high-performing community-based organizations,” Gonzalez said.

Unfortunately, the EITC does not help all poor people.

Low-income unauthorized immigrant families are denied access to EITC, even though 70% of unauthorized immigrant families have U.S. born children.

Ceiba helps their unauthorized immigrant family clients by providing them with free assistance in securing the Individual Tax Identification Number (ITIN). The IRS offers this number in a confidential manner, free from scrutiny by other federal agencies, to help unauthorized immigrants file tax returns.

Filing a tax return helps immigrants prove their presence in the U.S. in case they have a chance at a change of immigration status. The ITIN also helps people to open bank accounts. Tax returns are proof of income for the programs that their U.S. born children may be eligible for like college financial aid.”

Ceiba partner FINANTA/Community First Fund offers loans and mortgages to people with ITINs. “There is an effort in the PA legislature to help people with ITINs secure driver’s licenses just like in New Jersey and Delaware. We hope that PA joins the other 15 states in the US that promote safe driving for all,” added Gonzalez.

Julia Rivera. (LinkedIn)

Julia Rivera, external affairs director at Congreso de Latinos Unidos, Inc. agrees that EITC is designated as a poverty alleviation program but, “I don’t think we can necessarily speak specifically to whether it’s being successfully used for wealth building,” she added.

“There’s been research on how the dollar is specifically used; obviously, it’s designed to encourage folks to work. There’s a sliding scale on either end of a specific number on how the actual refund works,” Rivera said.

Port Richmond resident Zor Montes has been aided by EITC since 2005. Now a tax site coordinator for Campaign for Working Families (CFWF), she helps CFWF clients file their returns and obtain EITC.

Montes said EITC is good for helping people get out of debt; it aids first-time homebuyers, renters needing a security deposit, or furniture purchases, for example. She added that EITC typically helps those making roughly between $19,000 and $22,000 a year with three children. Through EITC, their refund may be $6,000 to $8,000.

Last year’s refunds were not as substantial for CFWF clients due to reforms and the lack of exemptions, she said.

Congreso’s mission is designed around addressing poverty within their community. Over time, the poverty rate hasn’t changed much in the Kensington and Fairhill areas so there’s a lot of work to do. Congreso has been trying an innovative approach over the last two years, an initiative called Mission to Impact.

Through it, Congreso is focusing on integrating their services in the areas of education, workforce development, health, housing, and parenting. The concept, Rivera said, is enabling individuals and families to achieve economic self-sufficiency by engaging them early on in education and workforce development services. It also is ensuring they are tying those folks as needed to supportive services Congreso offers internally in the areas of health, housing, and parenting.

“The whole concept behind it is to integrate the supportive services with these education and employment or workforce development services so that folks are really able to build their skill sets, access opportunities, get their needs met and ensure that they’re able to successfully achieve those goals,” Rivera added.

In 2020, Congreso processed 323 tax returns for tax year 2019 (they stopped processing tax returns due to COVID in mind-March). Total amount of tax refund was $609,829 and the EITC refund was $269,151. The average EITC earned was approximately $2,077.

For tax year 2018, Congreso processed 537 returns. Total refund amount to the community was $960,981. The EITC refund totaled $429,441.

For tax year 2017, Congreso processed 594 returns. Total refund amount to the community was $1,085,840. The EITC refund totaled $508,304.

Rivera said Congreso will be starting their tax return assistance back up again; they are currently recruiting volunteers for their tax site. Congreso is hoping to recruit six to 12 volunteers and process at least 500 tax returns in 2021.

Generocity is one of 22 news organizations producing Broke in Philly, a collaborative reporting project on solutions to poverty and the city’s push toward economic justice.