State EITC

state eitc
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What is the EITC?
“The Earned Income Tax Credit, EITC or EIC, is a benefit for working people with low to moderate income. To qualify, you must meet certain requirements and file a tax return, even if you do not owe any tax or are not required to file. EITC reduces the amount of tax you owe and may give you a refund.”

Estimated Cost of Refundable Texas Earned Income Tax Credits, (FY) 2017:
Federal EITC claims in Tax year 2013: 7.3 Million
Percent of Total U.S. EITC Claims, Tax Year 2013: 10.87%
Estimated  Federal EITC Claims in FY 2017 (in millions): 8.2 Million
Estimated Cost of State EITC in FY 2017* (in millions):

  • Set at 5% of Federal Credit: $372 Million
  • Set at 10% of Federal Credit: $744 Million
  • Set at 20% of Federal Credit: 1.5 Billion

 

Solution(s):

We could use the federal EITC eligibility rules for a state EITC program to enable easier implementation and keeps costs down.

Unfortunately, this could leave out the most vulnerable of our communities. We believe the below recommendations will alleviate poverty and saving taxpayers money.

  • Lower the state EITC age limit from 25 to 18
  • Raise the state EITC age limit from 65 to 67

How would we finance a state EITC?

  • Close corporate loopholes in the state sales tax
  • Finance a state EITC with a portion of TANF funds
  • Reallocate some of the $800 million used for border security to fund a state EITC

 

 

Ideas from the Right A Publication from Conservative Approaches to Tax Credits for Working Families

R Street – One anti-poverty initiative both sides can agree on

BROOKINGS – Earned Income Tax Credit (EITC) Interactive and Resources

BROOKINGS – EITC Expansion Would Strengthen Credit for Childless Workers

IRS – States and Local Governments with Earned Income Tax Credit

EPI – The Earned Income Tax Credit and the Child Tax Credit – History, Purpose, Goals, and Effectiveness

EITC and Child Tax Credit Promote Work, Reduce Poverty, and Support Children’s Development, Research Finds

CBPP – Policy Basics: State Earned Income Tax Credits

CBPP – Federal Taxes Pushed 7 Million “Childless Workers” Below, or Further Below, Poverty Line in 2012

CBPP – Strengthening the EITC for Childless Workers Would Promote Work and Reduce Poverty

A Renewed Push for Earned Income Tax Credit in States

A Hand Up for Michigan Workers: Michigan’s State Earned Income Tax Credit

An Anti-Poverty Policy that Works for Working Families

AEI – Balancing the trade-offs: Options for expanding the childless worker earned income tax credit

Earned Income Tax Credit vs the Negative Income Tax (basic income)

Princeton – Is the EITC as Good as an NIT? Conditional Cash Transfers and Tax Incidence

The California’s Legislature’s Nonpartisan Fiscal and Policy Advisor – Options for a State EITC

R Street Institute – Finding new ways to make work pay

R Street Institute – R Street applauds Rep. Gardner’s Earned Income Tax Credit bill

R Street Institute – The one budget proposal worth seizing

Rand Paul Exaggerates Tax Credit Fraud

Washington State Budget and Policy Center – The Working Families Tax Rebate

Washington State – The only state without an income tax to have an EITC

The Seattle Times – Inslee seeks tax rebate for low-income families

Colorado Earned Income Tax Credit (EITC)

NCSL – Tax Credits for Working Families: Earned Income Tax Credit (EITC)

NBER – Behavioral Responses to Taxes: Lessons from the EITC and Labor Supply

NBER – Income, the Earned Income Tax Credit, and Infant Health

National Review – What EITC Recipients Know about the Program — and What That Suggests about Reform

Why Young And Childless Americans Are Excluded From The Earned Income Tax Credit And How We Can Expand It

Charleston Gazette – Matthew Rohrbach: Tax credit path to middle class

New York Times – Oklahoma makes the poor poorer

The Nation – California Is Massively Expanding One of the Most Effective Tools to Make Work Pay Better