Fund-Supported EITC Campaign Has Major Economic Impact on Community

JACKSONVILLE, Florida — When a low-income taxpayer connects with the community-supported Real$ense Prosperity Campaign, she receives free tax preparation services and, in all probability, a healthy tax refund thanks to the Earned Income Tax Credit.

But what does the community receive?

Plenty, according to a recent study by Jacksonville University.

Between 2004 and 2010, Real$ense has prepared more than 60,000 tax returns, helping low-income taxpayers capture more than $18 million in credits and refunds and save more than $3 million in tax preparation fees. The study found that this additional income in the pockets of these taxpayers has been responsible for:

  • creating 204 new jobs,
  • generating $8.1 million in new labor income,
  • creating $23.2 million in total economic output across Duval County.

“The work of the Real$ense Prosperity Campaign has paid large dividends throughout

the Jacksonville community,” say the study’s authors, Hassan Pordeli, Ph.D., professor of economics and finance at the JU Davis College of Business, and his colleague, Peter Wynkoop of The HPW Group, LLC.

“The Earned Income Tax Credit is an excellent vehicle for growing financial assets among low-income populations,” said Sherry Magill, president of the Jessie Ball duPont Fund, “and the Real$ense campaign has been an excellent vehicle for connecting taxpayers with the Earned Income Tax Credit. As a community, we need to recognize that when low-income taxpayers improve their financial position, we all win.”

The Earned Income Tax Credit (EITC) is a refundable credit on federal income taxes for people who work but don’t earn high incomes. EITC is the federal government’s largest benefit program for working individuals and families., with qualifying families eligible to receive up to $5,666 in credits in tax year 2010.

The Real$ense Prosperity Campaign was born in 2003, when Magill and the Jessie Ball duPont Fund decided to launch an Earned Income Tax Credit campaign in Duval County. Research showed that a large number of individuals and families who were eligible to claim the EITC were unaware of the benefit, leaving millions of dollars in potential income on the table. A well-organized community campaign, the Fund hoped, could build awareness of the EITC and help more low-income taxpayers access the benefit.

At the time, organizers were focused on the benefits to individuals and families. Earlier this year, however, the Jessie Ball duPont Fund asked Jacksonville University to study the broader economic impact of the campaign over the six years from 2004-2010.

In addition to a community-wide assessment, the JU researchers took a detailed look at the three zip codes where RealSense has been most active — 32206, 32208 and 32218. These three contiguous neighborhoods run north from downtown Jacksonville, along the I-95 corridor past Jacksonville International Airport. All have below-average household and individual incomes.

Between 2004 and 2010, taxpayers in these three zip codes have realized $10.8 million in EITC refunds and tax-preparation savings. JU researchers estimate that $7.1 million of these dollars remained within the three zip codes (the reminder “leaked” out as consumers spent money in other parts of town).

These funds are a stimulus to the local economy, as individuals and families spend the money on various consumer purchases. As the money circulates through the economy, value is added and productivity achieved, ultimately resulting in the creation of jobs.

In the three zip codes, the JU report estimates, the $7.1 million in EITC income and tax preparation savings was responsible for:

  • creating 106 new jobs,
  • generating $4 million in new labor income,
  • creating $11.3 million in total economic output across Duval County.

Food services and drinking establishments were the source of the largest number of new jobs, with private hospitals and physician, dentist and health practitioner offices providing the second and third largest number of jobs in the three zip codes.

In addition to offering free tax preparation services, the Real Sense Prosperity campaign also offers free financial management classes. A 2011 survey showed that those who took the classes were:

  • more likely to have a checking and a savings account,
  • more likely to have a written budget,
  • less likely to have paid overdraft fees,
  • more likely to have paid all of their bills on time,
  • more likely to have reduced their total debt.