Tax Credits for Working Families

Weekly Round-Up: January 18, 2013

January 18th, 2013

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.

  • According to a report released by The Institute on Taxation and Economic Policy, Louisiana Gov. Bobby Jindal’s recent proposal to eliminate personal and corporate income taxes, and consequently end the state’s Earned Income Tax Credit (EITC), would lead to a tax increase for the bottom 80 percent of Louisianans. Tim Barfield, head of the Department of Revenue, suggested that while low- and middle-income people would lose the state’s EITC, the state could deliver a similar benefit to people who receive the credit, possibly through a rebate. The governor acknowledged this idea, later announcing that his plan will set aside funding to operate an EITC or “something similar” to help low-income individuals and families in the state. (Business Report, Bayou Buzz)

  • Advocates across Vermont this week voiced strong opposition to Gov. Peter Shumlin’s plan to take $17 million from the state’s EITC to finance an increase in childcare subsidies. Since Vermont’s EITC provides roughly $25 million each year to help about 45,000 low- and middle-income working families make ends meet, Shumlin’s plan would cut support for these working families by more than half. (VPR News, The Brattleboro Reformer, Public Assets Institute)

  • The Colorado Senate recently introduced the Colorado Working Families Economic Opportunity Act, as the first bill of 2013 and the Senate leadership’s top priority. The bill includes the creation of a regular EITC that would be funded without regard to the state’s TABOR law (the current EITC has not been implemented since 2001), a state Child and Dependent Care Credit and a Child Tax Credit (CTC). Opponents are arguing that the state budget cannot support the changes proposed by the bill, but advocates contend that the three credits would particularly benefit low- and middle-income working families by helping to offset some of the financial burden brought about by the expiration of the federal payroll tax “holiday” at the beginning of the year.  (The Denver Post, Colorado Pols)

  • Last month, the District of Columbia Council took an important step to help low- and moderate-income families by expanding the refundable Homeowner and Renter Property Tax Credit for renters and homeowners who spend a particularly high portion of their incomes on rent or property taxes.  The improvements to the District’s property tax circuit breaker included raising the income eligibility from $20,000 to $50,000, increasing the maximum annual credit from $750 to $1,000, allowing renters to calculate the “property taxes” they paid as 20 percent of their rent rather than the current 15 percent, indexing the maximum credit amount of $1,000 and the eligibility income threshold of $50,000 for inflation, and expanding eligibility so that more than one taxpayer per household can apply (for example, roommates who rent in the same home). While these improvements will certainly help low- and middle-income workers struggling to support their families as housing costs rise, this week, the DC Fiscal Policy Institute reminded us that District lawmakers must allocate funding for the circuit breaker improvements in the FY 2014 budget before residents can benefit. (DC Fiscal Policy Institute 1, 2, 3)

  • Advocates in Connecticut fear that the new state EITC could become a target for cuts this spring as the state continues to struggle with its budget, even though the credit has proven to be a small investment that makes a big difference for as many as 13 percent of households, across every town in the state. Connecticut created its EITC in 2011 as 30 percent of the federal credit. (The CT Mirror)

  • Oregon’s new legislative session launched on Monday, and advocates are pushing legislators to support Gov. John Kitzhaber’s call to go beyond renewing the state EITC to increase the credit from 6 percent of the federal EITC to 8 percent. Oregon’s EITC is scheduled to expire at the end of 2013, so unless lawmakers renew the credit, about a quarter-million low- and middle-income working families in Oregon will have less net income to support their families. Fortunately, Gov. John Kitzhaber’s proposed budget for the 2013-15 biennium includes an additional $22 million for the EITC, in addition to raising the rate up from 6 percent of the federal EITC — “one of the lowest in the country,” according to the budget — to 8 percent. (The News Guard, The Statesman Journal)
  • Brandon Roberts of the Working Poor Families Project commented on a new and discouraging report that reveals that the number of working families in the U.S. who are low-income—defined as earning less than twice the federal poverty income threshold—continues to grow each year, with now nearly one-third of all working families not having enough money to meet basic needs. Acknowledging that Congress took an important step earlier this month when it extended the EITC and CTC expansions, Roberts argues that these numbers have serious implications for the children in these families who are more likely to lead more economically insecure lives as adults, and urged state legislatures to continue to support—and expand—their own versions of the EITC and other important family credits.. (Spotlight on Poverty and Opportunity, Reuters)

  • Tax Credits for Working Families will partner with the National Community Tax Coalition and several other national organizations to host a Congressional briefing on the importance of the EITC on Thursday, January 24, at the Russell Senate Office Building in Washington, D.C. The briefing will demonstrate how the credit encourages work and helps families pay for basic necessities and become more financially secure. Speakers will also discuss the important relationship between state and federal EITCs and what steps can be taken to strengthen these programs. (Tax Credits for Working Families)

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