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Earned Income Tax Credit Especially Important to Rural NM

PHOTO: A new analysis of the Earned Income Tax Credit shows its effects are more significant in small towns and rural areas than in bigger cities. Photo credit: Internal Revenue Service.
PHOTO: A new analysis of the Earned Income Tax Credit shows its effects are more significant in small towns and rural areas than in bigger cities. Photo credit: Internal Revenue Service.
December 1, 2014

SANTA FE, N.M. – A tax credit that helps many low-income working families keep more of their earnings is proving to be especially important in rural areas and small towns across New Mexico and the nation, according to a new study by the Center for Rural Affairs.

The Earned Income Tax Credit is touted as one of the most effective anti-poverty policy efforts.

"The Earned Income Tax Credit was used by more people in rural and small-town, small-city areas than in big urban areas in the country," says Jon Bailey, the center’s rural policy director and the study's author.

Bailey says the higher use of the tax credit tracks right along with the other economic indicators that point to many rural families still struggling financially.

Nationwide, the number of those who claim the credit is less than 19 percent in metropolitan areas, compared with more than 21 percent in rural areas and small towns and cities.

Bailey predicts that divide will continue to widen.

"Because the gap between rural areas and urban areas has been growing,” he explains. “So, if that trend continues, I would suspect that more people are going to need to use the Earned Income Tax Credit. It's going to be even more important."

Bailey says the increasing importance of the Earned Income Tax Credit to working families should send a message to federal policymakers to strongly consider proposals to expand its reach, making more people eligible.



Troy Wilde, Public News Service - NM