Tax Credits for Working Families

Ideas From The Right: An Exclusive Interview with AEI Scholar Michael Strain

August 19th, 2014

This issue is the latest in our new commentary series, “Ideas From The Right: Conservative Approaches to Tax Credits for Working Families.” This commentary is open for discussion on our blog.

For this issue, Tax Credits for Working Families director Lauren Pescatore sat down with Michael Strain, Resident Scholar at the American Enterprise Institute and co-author of Room To Grow, a collection of essays from conservative thought leaders on policies to strengthen the middle class. Mr. Strain’s responses have been edited for brevity.

  

Continue Reading »

Lauren Pescatore Posted in Recent Updates | No Comments »

News Round-Up: August 18, 2014

August 18th, 2014

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

Ideas From The Right: “Investing in Workers through the Earned Income Tax Credit”

August 13th, 2014

This issue is the latest in our new commentary series, “Ideas From The Right: Conservative Approaches to Tax Credits for Working Families.” For this issue, Utah State Representative Eric Hutchings (R) provided us with an updated version of his Op-Ed in favor of enacting a state Earned Income Tax Credit (EITC) that originally ran in The Deseret News.  

 

Investing in Workers through the Earned Income Tax Credit
by Utah State Representative Eric Hutchings (R) District 38

During the 2014 General Session of the Utah Legislature, I introduced legislation designed to address intergenerational poverty among working Utahns by establishing a policy with proven results. The legislation, HB 218 Working Individuals and Families Credit, was designed to provide further assistance to low- and moderate-income workers who are struggling to make ends meet by cutting state taxes and bolstering the impact of the federal EITC.

The Working Individuals and Families Credit was modeled after and linked to the federal EITC. Since 1976, the federal EITC has provided working families with the boost they so badly need when hours are cut and incomes erode.

In 2012, nearly 1 in 5 Utah taxpayers received the federal EITC. The effectiveness of the federal tax credit is well documented. It provides an incentive to work, increases job skills and has kept more than 60,000 Utahns, 33,000 of whom were children, out of poverty. President Ronald Reagan called the EITC a “sweeping victory for fairness” and “the best anti-poverty, the best pro-family, the best job creation measure to come out of Congress.”

The Working Individuals and Families Credit is a Utah investment, particularly in the working poor, not through a government handout but with a ladder up to help working families climb their way out of poverty. Among those helped would be our military families, including our returning veterans, who could use the Utah tax credit to supplement their wages as they make their way back into the civilian workforce.

The Working Individuals and Families Credit would provide a Utah tax credit to those taxpayers who receive the federal EITC. Although substantially smaller than the federal EITC, many low-income workers who are only an illness, a layoff or perhaps a car repair away from financial devastation would be aided by even this small bonus.

Not only will the Working Individuals and Families Credit invest directly in workers, but it will invest in their children and our local economies. Today, nearly 1 in 6 Utah children lives in poverty – and nearly half of those children are living in intergenerational poverty. However, outcomes for children living in families receiving the federal EITC, and thereby the state tax credit, experience improved health and academic outcomes and greater lifetime earnings, decreasing the risk of a lifetime of poverty.

The Working Individuals and Families Credit does require an investment by the state but will generate economic activity in communities throughout our state. By reducing the taxes for these low-income workers, they will have additional resources to meet the basic needs of their families. As is the case with the federal tax credits, the state credits will be largely spent in our small businesses, helping those businesses continue to recover from the Great Recession. The Working Individuals and Families Credit is a win-win for Utah. It is time to make this modest investment in our low-income workers, who continue to play a valuable role in Utah’s re-energized economy.

The Working Individuals and Families Credit passed with a strong bipartisan vote in the House of Representatives 38-25. It received a favorable recommendation from the Senate Revenue and Taxation Committee, but the Session adjourned before the bill was voted on by the Senate. Continuing to support this bill’s path through the legislature and urging enactment will bring much-needed support to thousands of Utahns and their families by helping to ensure that their hard work pays off.

Lauren Pescatore Posted in Recent Updates | Comments Off

News Round-Up: August 11, 2014

August 11th, 2014

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

  • The Washington Post‘s E.J. Dionne wrote that support for expanding the Earned Income Tax Credit (EITC) for childless workers and a refundable Child Tax Credit is “plain vanilla bipartisanship.” (The Washington Post)

  • NPR’s Planet Money took a closer look at the overwhelming success of the EITC in helping working families make ends meet, the bipartisan support for the credit and its impact on the families that collect it. (NPR)

    Continue Reading »

    Tags:
    Lauren Pescatore Posted in Recent Updates, Weekly News Round-Up | Comments Off

News Round-Up: August 4, 2014

August 4th, 2014

Here are some highlights from last week’s news on family tax credits. 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.

  • The Organisation for Economic Co-operation and Development (OECD) and the International Monetary Fund (IMF), both of which support an expanded Earned Income Tax Credit (EITC) and increased federal minimum wage, issued recent reports showing why the two policies work best as complements rather than competing alternatives. (The Center on Budget and Policy Priorities, OECD, IMF)

  • The National Women’s Law Center issued a statement opposing the recent House-approved Child Tax Credit Improvement Act of 2014. The organization argued that the legislation fails to extend a critical improvement in the Child Tax Credit for low-income families and would deny the credit to millions of children in immigrant families. (The National Women’s Law Center)

    Continue Reading »

    Lauren Pescatore Posted in Recent Updates, Weekly News Round-Up | Comments Off

Let’s Address the Elephant in the Room

July 30th, 2014

By: Lauren Pescatore

Like most of you, we were startled to recently find out that the U.S. government made about $100 billion in improper payments last year. Even more alarming: approximately $14.5 billion of that was in the form of Earned Income Tax Credits.

We skirted around this news for a bit – debating how to share it or even whether to share it at all. Some are quick to blame the high number of improper payments on the EITC’s complex qualification structure or taxpayer fraud. Others are just as quick to call for the credit’s demise.

Continue Reading »

Lauren Pescatore Posted in Earned Income Tax Credit, Recent Updates | Comments Off

News Round-Up: July 28, 2014

July 28th, 2014

Here are some highlights from last 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.

Ideas From The Right: Rep. Paul Ryan Proposes Increase to EITC for Childless Workers

July 24th, 2014

This issue is the latest in our new commentary series, “Ideas From The Right: Conservative Approaches to Tax Credits for Working Families,” which highlights new proposals from conservative policymakers and thought leaders on how to improve tax incentives like the Earned Income Tax Credit (EITC) and Child Tax Credit. Ideas From The Right seeks to draw attention to the growing support for these credits at both the federal and state level while sparking discussion on the merits of different approaches and opportunities for consensus among conservatives and progressives.This commentary is open for discussion on our blog.

During a policy discussion at the American Enterprise Institute (AEI) this morning, House Budget Committee Chairman Paul Ryan unveiled a new plan to fight poverty and expand opportunity in America, which included increasing the federal EITC for childless workers and noncustodial parents.

Continue Reading »

Lauren Pescatore Posted in Earned Income Tax Credit, Recent Updates | Comments Off

Ideas From The Right: An Exclusive Interview With Brookings’s Ron Haskins

July 23rd, 2014

This issue is the latest in our new commentary series, “Ideas From The Right: Conservative Approaches to Tax Credits for Working Families,” designed to highlight new proposals from conservative policymakers and thought leaders on how to improve tax incentives like the Earned Income Tax Credit and Child Tax Credit. Ideas From The Right seeks to draw attention to the growing support for these credits at both the federal and state level while sparking discussion on the merits of different approaches and opportunities for consensus among conservatives and progressives.

In this issue, Lauren Pescatore of Tax Credits for Working Families interviews Ron Haskins, former White House and Congressional advisor on welfare issues, current co-director of the Center on Children and Families, Budgeting for National Priorities and senior fellow, economic studies at the Brookings Institution and senior consultant at the Annie E. Casey Foundation.

 

RonHaskinsWhy do you think tax credits for working families have recently catapulted to the forefront of so many conservative platforms?

Republicans have a long history of supporting the EITC. But a number of factors play into this recent surge in support – one of which is the current minimum wage vs. EITC debate. Republicans favor the EITC, especially in the midst of a minimum wage debate because it is much better targeted and arguably imposes less of a burden on the economy.

 

Will this be a contested issue among conservatives?

Definitely. Many conservatives believe the tax code should be used primarily to collect revenue. There are those who share Mitt Romney’s stance on the so-called “47 percenters” and believe tax credits, especially those that are refundable, do quite the opposite. Credit refundability will be a strong point of contention among Republican lawmakers.

The amount of EITC payments made in error is also a likely platform for conservative opponents of the credit. I think it’s wrong to say “fraud,” because I think most EITC overpayments are truly error. But some Republican leaders may turn to this issue as a reason to oppose any increases to the credit. There are not many federal programs with an error rate as high as the EITC.

 

How would improving work incentives like the Child Tax Credit and Earned Income Tax Credit help policymakers advance conservative goals?

Compared to other programs that are intended to help low-income families, these credits have “Republican” written all over them. They embrace conservative ideology by promoting hard work and stable families – these credits are intended to encourage work, can only be collected by those who are currently working and offer support for workers raising children.

In addition, we’ve seen a shift in conservative policy to target support towards the success of younger minority groups, young males in particular. There’s evidence that credits like the EITC encourage these young men to work. The hope is that an expanded EITC for childless workers would also help them continue to be successful throughout their careers and advance to higher-paying jobs. This is a group with potential to become self-sufficient middle-class workers, and that’s where we need to be focusing.

 

So, would you recommend lowering the age requirement to collect the EITC so that more young men are eligible for the credit?

I would. I’d be tempted to even recommend bringing the age requirement down to 19, but the problem with that is then you get students. A kid going to community college because that’s all he can afford, trying to get a technical degree, that’s a kid you want to help. But a middle-class student going to a four year college, that’s not who we need to focus on. So, lowering the age requirement for the EITC could get tricky.

 

Where do you see areas of opportunity for bipartisan collaboration around some of these proposals?

Of the various issues that are on the table right now, increasing the EITC for childless workers and noncustodial parents has a decent chance of garnering bipartisan support. The President has proposed an increased credit for these workers and Paul Ryan, Marco Rubio and Mike Lee have all expressed their support for an EITC reform that helps this group.

 

What obstacles do you foresee as possibly hindering these proposals from becoming law?

As I mentioned before, a standalone bill to improve the EITC or Child Tax Credit could have a pretty good chance of bipartisan endorsement. But I wouldn’t be surprised if a credit expansion gets tied into an overall tax reform package, either from the Democrats or the Republicans, and ultimately gets bogged down by a number of other issues the opposing party doesn’t support.

Lauren Pescatore Posted in Child Tax Credit, Earned Income Tax Credit, Recent Updates | Comments Off

News Round-Up: July 21, 2014

July 21st, 2014

Here are some highlights from last 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.

  • A bill from Rep. Cory Gardner (R-Colo.), H.R. 5070, seeks to eliminate improper Earned Income Tax Credit (EITC) payments by increasing penalties and expanding IRS authority, and use the savings to expand the credit. The bill would authorize a study to improve the efficiency and effectiveness of the EITC while reducing improper payments. (KRAI-FM, Rep. Gardner)
« Older Entries |