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Weekly News Round-Up: April 6, 2012 | Tax Credits for Working Families

Tax Credits for Working Families

Weekly News Round-Up: April 6, 2012

April 6th, 2012

Here are some highlights from this week’s news on family tax credit issues. Remember – you can also track news coverage throughout the week by visiting our RSS feed, where you can filter news by a specific credit and/or state.

  • On Thursday, Iowa Gov. Terry Branstad said he would be willing to expand the state’s Earned Income Tax Credit (EITC) if Democrats agree to cut commercial and industrial property taxes permanently. Minutes later, Democratic Senate Majority Leader Michael Gronstal said his party wouldn’t insist that the EITC increase be signed into law before negotiating the property tax measures. The parties have been at a standstill on this issue since January, when Sen. Joe Bolkom, a key Democrat, vowed that no commercial property tax cut would happen without the governor’s signature on a bill to increase the EITC. Branstad, who line-item vetoed the increase twice last year, said of the credit, “I don’t see that as really a job-creator, although it would provide some money for lower-income workers. I’m willing to accept that as part of the deal, if we can get this permanent change.” (Des Moines Register, Quad-City Times)
  • The Oklahoma House and Senate continue to consider proposals that eliminate the state income tax. Both chambers have passed different variations of bills aimed at reducing or completely eliminating the individual income tax, and all of them appear to eliminate the state’s EITC, child tax credit, child care credit, and property tax circuit breaker. The bills are now headed to a joint House and Senate conference committee, where a final agreement will be hammered out with input from the governor’s office. (The Oklahoman, The Republic)
  • A new report by the Center on Budget and Policy Priorities finds that Michigan will impose income taxes on those living slightly below the poverty line in 2012, due to policy changes made last year that reduced Michigan’s EITC and circuit breaker Homestead Credit to pay for tax cuts for corporations. Reinstating the state’s Earned Income Tax Credit to its original rate – cut from 20 percent of the federal credit to 6 percent starting in tax year 2012 – would help Michigan restore itself as one of the better states when it comes to tax policies on the working poor. (Michigan League for Human Services, Oakland Press)

  • In an op-ed in The Record, Raymond Castro, senior policy analyst at New Jersey Policy Perspective, criticized Gov. Chris Christie’s tax cut proposal. The proposal includes an immediate state income tax cut for all New Jersey households providing substantial benefits to the top 1 percent. The proposal also includes a slow roll-out of an EITC increase, which is really just a restoration of the cut to the EITC that Christie made two years ago. The increase will be doled out gradually: no improvements in 2012, an increase from 20 to 22.5 percent of the federal EITC in 2013, and then back to 25 percent in 2014. (The Record)

  • Kentucky Youth Advocates has been advocating for the adoption of a refundable state Earned Income Tax Credit and improvements to Kentucky’s Child and Dependent Care Tax Credit by making it refundable. “The Kentucky General Assembly failed to act on the credits this legislative session, but we believe these credits might just be one way to help lift Kentucky families out of poverty and improve their health,” said Terry Brooks, the group’s executive director. (Lexington Herald-Leader)

  • It’s often claimed that the richest Americans pay a disproportionate share of taxes while those in the bottom half pay nothing. But the underlying premise of this argument is based only on the federal individual income tax, ignoring the fact that Americans are subject to many other types of taxes  – from federal payroll and excise taxes to state and local taxes. Citizens for Tax Justice recently released new 2011 numbers, which find that low- and middle-income families, who may not earn enough to owe federal income taxes, pay a substantial portion of their income in these other, mostly regressive taxes. These taxes often take a larger share of their income than they take from wealthier families. Therefore, refundable tax credits like the EITC and Child Tax Credit are built into our federal income tax system to help offset the regressive effect of federal payroll, gas and other taxes. (Citizens for Tax Justice)

  • According to an analysis from the Center on Budget and Policy Priorities, tax credits for working families are responsible for keeping millions of women and girls out of poverty each year. The federal EITC kept an estimated 3.4 million women above the poverty line in 2010. Together the EITC and CTC helped lift nearly 5 million women and girls out of poverty in 2010, including more than 800,000 just from the Recovery Act expansions of both of these credits. (Off the Charts, Think Progress)

  • We’ve talked about Rep. Paul Ryan’s budget, but on the opposite side of the spectrum is the House Congressional Progressive Caucus’ (CPC) budget, “The Budget for All.” The CPC budget would extend the expansions to refundable tax credits like the EITC and Child Tax Credit that were enacted under the Recovery Act, and are scheduled to expire at the end of 2012. (OMB Watch)

  • GOP presidential hopeful Rick Santorum has the highest favorability rating among women of any Republican contender according to Politico. These women tend to believe Santorum is more focused on economic issues that would assist a woman staying at home to take care of her children. Therefore it’s ironic, as Care2 points out, that “Santorum’s proposal for ‘enabling’ mothers to better stay home with children via the tax system would be to triple the child tax deduction, rather than provide a bigger Child Tax Credit, meaning that it would be of much greater benefit to those already doing well than to those struggling to make ends meet,” an irony we’ve blogged about in the past. (Care2)

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