Some can be found bagging groceries at the neighborhood supermarket. Others work as servers in restaurants or cashiers in local stores. Meanwhile, others are simply jobless. They’re youth who have reached the age of 18, or in some cases 21, and are “aging out” of the foster care system into independence. Each year, as 1,200 youths in New York City age out, too many do not find their way to continuing their education and only 20 percent are reunified with their families or adopted. A great number get by with little if any support, often joining the growing ranks of the city’s under or unemployed.
This fragile population of youth leaving foster care are among those that might benefit most from a new bill that would lower the age – now set at 25 – to qualify for the Earned Income Tax Credit. According to a projection made by the Federation of Protestant Welfare Agencies (FPWA), it would make most workers 17 years and older eligible for an average benefit of $280, a reward worth seeking for those just getting by.
Introduced in August by state Assemblywoman Susan John, Bill A11826 would extend the Earned Income Tax Credit (EITC) to young workers, ages 17-24; increase the standard deduction for people ages 18-24; and provide for the deduction of student loan interest.
Beyond reaching young men and women in need, another goal of the bill is to keep young New Yorkers in the state. Places like upstate New York are experiencing an exodus of youth, said Alan Richards, spokesperson for Assemblywoman John, a Democrat representing the Rochester area. “New York is an expensive place to live especially if you’re young. Young people move away to pursue lower cost of living. This bill seeks to reverse the flight of young people and help them afford to live in New York,” Richards said. Not only could the bill help increase the number of young New Yorkers in the workforce, it may also improve employee retention rates, he said.
A federal program that provides tax-free income to the working poor, EITC is widely considered an effective means of reducing poverty and receives bipartisan support. According to a 2006 report from the Brookings Institution in Washington, EITC lifted 4.4 million people in low-income, working families nationwide out of poverty in 2003. Last year, Mayor Bloomberg proposed amendments to the federal law that would lower the qualifying age to 21, increase the amount of benefit, and raise the maximum qualifying income. On his website, Democratic presidential candidate U.S. Sen. Barack Obama also advocates increasing the tax credit. (Republican presidential candidate U.S. Sen. John McCain’s website does not mention EITC and other published sources shed little light on his position.) Currently, for an individual without children, the maximum income to qualify is $12,590 and the qualifying age is 25. For a family with more than one qualifying child, the maximum income is $39,783, and there is no minimum age for parents.
This is an inequity that leaves teenagers and young adults lacking the federal assistance they “deserve,” according to a summary of the bill. It states: “This age group is often ignored and left out of exemptions, left with lower income deduction rates and not provided the benefits on par with the Federal government on student-loan deductions.”
Jill Poklemba, a senior policy analyst at FPWA, agrees. She worked with other members of FPWA to draft the bill’s language. “It’s a simple change to the law and it is easy [to implement] administratively,” said Poklemba, explaining why the group chose to endorse this economic initiative. It is part of a comprehensive effort to direct more resources to programs that assist “disconnected youth” – those who are neither in school nor working – and to highlight those that are effective.
“Youth who age out of foster care often have a very difficult time supporting themselves. Many of them also work in the underground economy. If they qualified for EITC it would obviously be a source of extra income, and it would probably encourage more young people to work in official jobs so they would quality for the EIT,” said Keith Hefner, director of Youth Communications, an organization that trains youth, including those in foster care, in journalism and publishes their stories.
While an EITC expansion may give youth aging out of the foster care system increased incentive to work, those engaged with this vulnerable population agree it needs to be coupled with effective supportive services that assist youth in areas like education and employment.
“We need to recognize and tap into the intellectual potential of every young person in foster care,” said Betsy Krebs, executive director of the Youth Advocacy Center, an organization aimed at empowering youth to advocate for themselves. “By asking them what they want to make of their lives, encouraging the development of their critical thinking skills by asking them questions, not lecturing them, by challenging them to think and act like future college students/accountants/website designers/teachers/whatever they wish – and then by introducing them to leaders in the community who can give them ‘real world’ insight into how to move forward as a young adult – we promote employment and education.”
Advocates say awareness of EITC benefits needs to be raised across the board. According to the federal General Accountability Office and the Internal Revenue Service, nearly one-quarter of eligible households do not apply for EITC. FPWA plans to collaborate with city agencies to conduct financial literacy classes and promote EITC awareness among youth.
Some youth aging out of foster care have never filed taxes, either because they’ve never worked, or they’ve been paid under the table. “I know one young man, now 31, who has worked on and off since age 18, and I believe more than half of his work has been off the books,” said Hefner.
While the bill has the support of FWPA and a business group called Unshackle Upstate, Assemblywoman John is still seeking more public support and sponsorship of a state senator. The bill will be reintroduced in 2009 and supporters hope it could take effect as early as 2010.
