Poor Philadelphians Are Leaving $100M in Tax Credits on the Table

Photo by Morgan Burke, Creative Commons license.

Philadelphia is the poorest big city in the United States. There are about 395,000 people living below the poverty line here, including 126,000 children. The city’s poverty is brutal, far-reaching and the root cause of many problems.

And yet an estimated 40,000 eligible Philadelphians failed to apply for the biggest antipoverty program in the nation last year. It’s called the federal Earned Income Tax Credit, and it gives qualifying city residents an average refund of $2,400. Add it all up, and that means Philadelphians left almost $100 million on the table. One. Hundred. Million. Dollars. That’s money that could have not only helped the poor, but also given a jolt to the local economy.

The City of Philadelphia wants to fix this. On Friday morning, Mayor Jim Kenney will launch a campaign to boost participation in the EITC program. Could his administration finally keep Philadelphians from missing out on millions? 

Citified spoke to the Revenue Department about the campaign, known as “You Earned It,” before the Friday kickoff. Here’s how it will work:

• The city is paying two nonprofits a total of $700,000 to help residents fill out their tax returns for free. Officials say this is critical because many residents don’t know they’re eligible for the EITC — and even those who do know often find the sign-up process confusing. (Details on eligibility requirements are here.)
• The city will spend another $350,000 to promote the EITC in a variety of ways: through mailers, fliers and street teams, as well as ads on the radio, SEPTA, Pandora (more on that in a minute) and in print.
• The You Earned It campaign has a website, which explains how to apply for the EITC and what it is in six different languages. There’s also a hotline — 215-686-9200 — where city employees can call in a third party to translate if necessary.

That’s all pretty standard fare for a messaging campaign. There are a few things that I find encouraging about it, though: The first is that the city used focus groups last year to determine how to best encourage people to sign up for the tax credit, instead of coming up with a strategy in a vacuum. Focus group members said they would be more likely to register if someone helped them prepare their tax forms. Participants also responded more positively to the EITC when they were told they had earned it and would get access to it immediately, as opposed to being told that it was something they could use for a rainy day fund. Hence the name of the campaign.

“The You Earned It Philly campaign communicates to Philadelphians that the Earned Income Tax Credit is something they are entitled to,” explains Revenue Commissioner Frank Breslin. “Not a handout or something only meant for a few people, but a tax credit for more than 200,000 eligible Philadelphians that puts a meaningful amount of money into the hands of working individuals and families.”

The second good sign is that the city is using Census data to focus its campaign on neighborhoods where residents are most likely to be eligible for the EITC. Thirdly, officials say their ads will be translated in different languages. And lastly, the city is advertising on Pandora, which enables it to hone in on listeners based on their age, income level and zip code. That’s pretty cool.

What are the downsides of the campaign? Its website could stand to go into more detail about what the EITC is. At one point, it directs Philadelphians to the IRS’ intimidating, confusing home page to learn more, which seems like a cop-out.

The campaign also has history working against it. One of former Mayor Michael Nutter’s goals was to increase participation in the EITC and other antipoverty programs. Under Nutter, the city opened seven “BenePhilly Centers” and paid the Campaign for Working Families to assist Philadelphians with their taxes. While Nutter’s antipoverty plan made a difference — the Campaign for Working Families says it helped residents claim almost $10 million in the EITC last year — it still didn’t do nearly enough.

If Philadelphia’s new plan to promote the EITC is successful, the city will partly have Nutter to thank: Much of the strategy for You Earned It was developed under his watch. Now it’s up to the Kenney administration to make it work.