As a working single parent, tax season can’t come soon enough. It’s the time when I can get caught up on bills and don’t have to drastically budget my groceries. It’s a time when I can even consider “extravagant” things like fixing my car, buying a membership to the zoo or a museum, and getting a soccer jersey for my son or presents for his next birthday.
One of the reasons tax season is a big deal to me is the Earned Income Tax Credit. EITC is a refundable tax credit for working parents and individuals who earn low-to-moderate incomes. Over 330,000 Colorado families qualify for EITC, with an average refund of $2,173. Colorado workers and parents also qualify for a state EITC, which means an extra $300 to $500 for Colorado families when tax season rolls around.
My son is four, and I’ve been fortunate enough to earn more as he’s gotten older, but that hasn’t come without challenges. For example, when I made a very low income I qualified for safety-net programs like the Child Care Assistance Program, income-based rent and food assistance. In those years, my tax refund made a big difference for my kiddo, and helped him experience enrichment activities that parents who make higher incomes can easily afford.
But as I made more money, it also meant I no longer qualified for safety-net programs. And even though my income was going up, it wasn’t keeping up with the cost of living in Denver. For example, my monthly child-care costs increased nearly 500 percent when my annual income went up a modest amount, from $38,000 a year to over $42,000. For many months I was spending nearly half my annual income on child care. Families like mine go into debt to pay for daycare and preschool, and often have to either move their children to more affordable situations or patch together child care by getting a mixture of family, friend and neighbor help, and maybe a couple of hours of preschool a week. Kiddos who are forced to transition care providers at a young age can experience stress, which never felt fair for my son, Josiah. Tax credits like the EITC help families who earn low incomes and parents who earn moderate incomes make ends meet.
What qualifies as a moderate income is drastically different depending on where we live. As a single parent in Denver, even though I make about 70 percent of the median income, I have yet to achieve a livable wage. The point of sharing all this information is to say that I represent a large portion of Coloradans. According to a study in 2018, more than 60 percent of single moms lack adequate income to make ends meet in Colorado’s most populated city. A single parent of one child needs to earn nearly $58,000 a year to “simply get by.”
And while many struggling families look to their tax refunds as a lifeline, the tax code is in bad need of reform. Workers and families who earn low and moderate incomes, who are also more likely to be people of color, actually pay a larger share of their income in taxes than the wealthiest people (the vast majority are white) and corporations. Much of that is due to Colorado’s reliance on a single-rate income tax and regressive sales tax, but another culprit is the long list of tax giveaways allowed under state law. It’s past time for us to clean up the tax code and make it work for families instead of corporations and the rich.
During last year’s legislative session, House Bill 20-1420 helped move us in the right direction. That bill expanded Colorado’s EITC from 10 percent of the federal credit to 15 percent, and starting this year, workers who file taxes using an Individual Tax ID Number — the vast majority of whom are undocumented immigrants —will be eligible for the state EITC for the very first time. While this is a welcome change, there’s still a lot of progress needed to reform Colorado’s unfair tax code and support working families like mine.
Let’s hope lawmakers use the opportunity they have this year to expand EITC again. And while they’re at it, legislators could also look at funding the state Child Tax Credit, another credit similar to EITC that Colorado has never funded before, as another way to boost incomes for families when they need it most.
A few extra hundred dollars can make all the difference in the world for families to simply stay afloat, and with the extraordinary stress of the pandemic, families like mine need relief in any way we can get it.
In fact, we're counting on it.
Kayla Frawley is a single mom in Denver, a former midwife and currently a master's in public health candidate at New Mexico State University, focusing on social welfare policy.
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