Advancing Tax Systems That Work for All
Improving The Lives Of Children And Families
The tax code is one of the most powerful tools federal, state, and municipal governments have to provide families with economic security and wealth-building opportunities. There is strong evidence that changes to the tax code can positively impact the health, mental health, housing, and educational outcomes of children, youth, and families.
What do we mean by “tax systems” and why does it matter for children and families?
We all pay taxes, interact with tax systems, and benefit from the revenue generated by the collection of taxes. While it can seem invisible, it is a very present aspect of the lives of all families. Taxes are used to raise money for the things we want to do as a community – pay for roads, fire departments, libraries, public education, health care. Families interact with taxes and tax systems every day—paying sales taxes on purchases, paying property taxes through their homeownership or rent, paying income taxes. And at the end of the year, families file their federal and state income taxes which puts them in contact with federal and state tax systems. Every area of a child and family’s life is impacted by the taxes through the tax code and tax system.
How is work on tax systems connected to equity?
The current tax code and the tax systems that implement it are inequitable. In its current form, certain members of society benefit from the tax code while others do not. These inequities lead to broad and systemic impacts that hurt children and families. This is particularly true for Black and brown families. The examples listed below describe inequities and their impacts on children and families.
Advancing Tax Systems That Work for All
Improving The Lives Of Children And Families
The tax code is one of the most powerful tools federal, state, and municipal governments have to provide families with economic security and wealth-building opportunities. There is strong evidence that changes to the tax code can positively impact the health, mental health, housing, and educational outcomes of children, youth, and families.
What do we mean by “tax systems” and why does it matter for children and families?
We all pay taxes, interact with tax systems, and benefit from the revenue generated by the collection of taxes. While it can seem invisible, it is a very present aspect of the lives of all families. Taxes are used to raise money for the things we want to do as a community – pay for roads, fire departments, libraries, public education, health care. Families interact with taxes and tax systems every day—paying sales taxes on purchases, paying property taxes through their homeownership or rent, paying income taxes. And at the end of the year, families file their federal and state income taxes which puts them in contact with federal and state tax systems. Every area of a child and family’s life is impacted by the taxes through the tax code and tax system.
What are some of the issue areas impacted by tax work?
Click on the image to see a fact about each issue area.
How is work on tax systems connected to equity?
The current tax code and the tax systems that implement it are inequitable. In its current form, certain members of society benefit from the tax code while others do not. These inequities lead to broad and systemic impacts that hurt children and families. This is particularly true for Black and brown families. The examples listed below describe inequities and their impacts on children and families.
Why are funders investing in tax work?
Video Playlist 1/5 videos 1
Making A Difference for Children Through Tax System Investments01:04
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Supporting Family Health and Well-being through Tax Systems Funding00:41
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Supporting Family Health and Well-being through Tax Systems Funding00:48
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Empowering Immigrant Communities through Improved Access to Tax Benefits01:37
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Reducing Economic Disparities Through Tax Systems00:55What tax strategies do funders support through grantmaking?
Research has shown that increased economic security and opportunity are connected to better outcomes across many domains. Foundations play a key role in advancing tax equity. From investing in equitable strategies to raising awareness of the importance of tax systems that work for all, there are a number of ways the philanthropic community can help move this work forward.
Expand Tax Credits
Federal and state tax credits – specifically the EITC and CTC—have proven to be significant poverty reduction strategies. Tax credit strategies are critical because, when well designed, they put cash back into the pockets of low and moderate income families. In December 2021, the Treasury Department issued a monthly Child Tax Credit payment to 61.2 million children—the vast majority of eligible children—which was estimated to keep 3.7 million children out of poverty and reduce the monthly child poverty rate by 29 percent.
Ways to Support Expanding Tax Credits
Funding Areas:
- Advocacy
- Awareness Building
- Messaging
- Outreach
- Public Policy
- Research
- Social and Traditional Media Oureach Campaigns
Fix Upside-down Code & Tax Systems
The upside-down tax code and systems hurts the lowest income families and doesn’t generate enough revenue to do what communities need and want. By fixing the upside-down tax code, we will create a more equitable system that works for all.
Ways to Support Fixing the Upside-down Tax Code & SystemsFunding Areas:
- Awareness Building
- Data Analysis & Research
- Data Visualization and Communications
- Policy-maker Education
- Public and Opinion Leader Education
- Tax Code Advocacy
Make System Less Complicated
Tax systems disadvantage low-income families. Filing taxes is complicated and intimidating. Too often low-income families are paying a very high price to file their taxes. On average, families pay about $150-$200 to get their taxes filed each year.
Ways to Support Making the System Less ComplicatedFunding Areas:
- Tax Filing Infrastructure & Services like Direct File Implementation & VITA
Address Tax System To Increase Revenue
Taxes are important because they are the way federal, state, and local government generate revenue to fund critical programs. Tax systems that rely on the lowest income earners to generate funding for needed programs and services leads to lack of funding. By shifting tax burden from low-income families to the very wealthy and corporations, states could generate the funds needed to support important services like child-care.
Ways to Support Generating More RevenueFunding Areas:
- Awareness Building
- Corporate Tax Reforms
- Research Exploring Tax Code Inequities
- Tax Code Repair
I’m interested in learning more. What next?
1. Learn More- Take a look at the case studies below to learn more about how funders are using tax-focused strategies to achieve their goals. You can also browse through the list of references used to build this page here.
Empowering Immigrant Communities through Improved Access to Tax Benefits
Rosie Arroyo, Senior Program Officer & Rosemary Veniegas, Director of Health Programs- California Community FoundationMaking A Difference for Children Through Tax System Investments
Michael Cassidy, Director of Policy Reform & Advocacy- Annie E. Casey FoundationSupporting Family Health and Well-being through Tax Systems Funding
Jennifer Ng’andu, Managing Director- Program- Robert Wood Johnson FoundationReducing Economic Disparities through Tax Systems
Lauren Thomas Priest, Program Officer- Community Foundation of Greater Atlanta
2. Connect With Us- Visit our Contact Us page to send us a note. We’d love to hear from you and provide any additional information that will help you begin, deepen or improve your work related to the tax code and tax systems.
3. Talk to Your Colleagues- Use the worksheet below to help facilitate a conversation with your colleagues.
Download the worksheet here Investing in a more equitable tax system is a direct investment in improving outcomes for children and families across all domains.
Why are funders investing in tax work?
What tax strategies do funders support through grantmaking?
Research has shown that increased economic security and opportunity are connected to better outcomes across many domains. Foundations play a key role in advancing tax equity. From investing in equitable strategies to raising awareness of the importance of tax systems that work for all, there are a number of ways the philanthropic community can help move this work forward.
Expand Tax Credits
Federal and state tax credits – specifically the EITC and CTC—have proven to be significant poverty reduction strategies. Tax credit strategies are critical because, when well designed, they put cash back into the pockets of low and moderate income families. In December 2021, the Treasury Department issued a monthly Child Tax Credit payment to 61.2 million children—the vast majority of eligible children—which was estimated to keep 3.7 million children out of poverty and reduce the monthly child poverty rate by 29 percent.
Funding Areas:
- Advocacy
- Awareness Building
- Messaging
- Outreach
- Public Policy
- Research
- Social and Traditional Media Oureach Campaigns
Fix Upside-down Code & Tax Systems
The upside-down tax code and systems hurts the lowest income families and doesn’t generate enough revenue to do what communities need and want. By fixing the upside-down tax code, we will create a more equitable system that works for all.
Funding Areas:
- Awareness Building
- Data Analysis & Research
- Data Visualization and Communications
- Policy-maker Education
- Public and Opinion Leader Education
- Tax Code Advocacy
Make System Less Complicated
Tax systems disadvantage low-income families. Filing taxes is complicated and intimidating. Too often low-income families are paying a very high price to file their taxes. On average, families pay about $150-$200 to get their taxes filed each year.
Funding Areas:
- Tax Filing Infrastructure & Services like Direct File Implementation & VITA
Address Tax System To Increase Revenue
Taxes are important because they are the way federal, state, and local government generate revenue to fund critical programs. Tax systems that rely on the lowest income earners to generate funding for needed programs and services leads to lack of funding. By shifting tax burden from low-income families to the very wealthy and corporations, states could generate the funds needed to support important services like child-care.
Funding Areas:
- Awareness Building
- Corporate Tax Reforms
- Research Exploring Tax Code Inequities
- Tax Code Repair
I'm interested in learning more. What next?
1. Learn More- Take a look at the case studies below to learn more about how funders are using tax-focused strategies to achieve their goals. You can also browse through the list of references used to build this page here.
Empowering Immigrant Communities through Improved Access to Tax Benefits
Rosie Arroyo, Senior Program Officer & Rosemary Veniegas, Director of Health Programs- California Community FoundationMaking A Difference for Children Through Tax System Investments
Michael Cassidy, Director of Policy Reform & Advocacy- Annie E. Casey FoundationSupporting Family Health and Well-being through Tax Systems Funding
Jennifer Ng’andu, Managing Director- Program- Robert Wood Johnson FoundationReducing Economic Disparities through Tax Systems
Lauren Thomas Priest, Program Officer- Community Foundation of Greater Atlanta
2. Connect With Us- Visit our Contact Us page to send us a note. We’d love to hear from you and provide any additional information that will help you begin, deepen or improve your work related to the tax code and tax systems.
3. Talk to Your Colleagues- Use the worksheet below to help facilitate a conversation with your colleagues.