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
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.