Earned Income Tax Credit

America’s most effective anti-poverty program is also its most overlooked, By Amber Phillips, February 4, 2014, Salt Lake Tribune: “Most people dread filing their taxes. But for Denver resident Corrine Fowler, it turned out to be a lifesaver back in 1997. Around Christmas, the then-22-year-old single mom lost both her jobs as an administrative clerk and hostess while putting herself through school. She had little money for the new year. But when Fowler filed her taxes, she learned that she qualified for the Earned Income Tax Credit, an often overlooked federal program that gives tax refunds to lower-income workers. The $1,800 check she received helped her pay her rent until March, when she had landed a job as a bank teller…”

Health Tax Credits – Michigan

Report: 436,000 Michiganders could be eligible for Obamacare tax credits next year, By Melissa Anders, November 5, 2013, MLive: “An estimated 436,000 Michiganders will be eligible for health insurance tax credits next year, but far fewer are expected to use them, according to a new report. The Kaiser Family Foundation estimates 725,000 Michigan residents could purchase plans on the federally run health insurance marketplace that launched Oct. 1 as part of the Affordable Care Act. Of those, about 436,000 would be eligible for tax credits, according to a report released Tuesday. Nationally, only about 35 percent of those eligible for tax credits are expected to sign up and use them in 2014, based on estimates from Kaiser and the Congressional Budget Office. Participation can vary by state, depending on public outreach and system problems with the online marketplace, said Gary Claxton, a vice president at Kaiser Family Foundation…”

Earned Income Tax Credit – Michigan

Michigan Dems: Restore low-income tax break, By Alanna Durkin (AP), March 3, 2013, Lansing State Journal: “Lansing taxi driver and single father Terry Beasley uses the federal and state earned-income tax credit to supplement the $12,000 he brings home every year, pay off bills and buy new clothes for his son. ‘It’s going to mean I’m going to have a whole lot less money and be a lot poorer,’ he said. About 800,000 low-income Michigan families, who qualify for the state’s earned income tax credit like Beasley, will bring home less money this year due to a reduction in the state’s earned-income tax credit to 6 percent from 20 percent of the similar federal credit, part of sweeping tax changes Republican Gov. Rick Snyder signed in 2011…”

Earned Income Tax Credit – North Carolina

Low-income taxpayers could lose N.C. credit, By John Frank, February 15, 2013, Charlotte Observer: “Lawmakers appear unwilling to extend a tax break for low-income workers, in what critics are calling the third strike against the state’s least fortunate in the first 10 days of the legislative session. More than 900,000 low- and moderate-income taxpayers received the modest tax break last year under the state’s earned income tax credit or EITC. The state credit was established in 2007, but it is scheduled to expire at the end of 2013 unless legislators act to extend it…”

Earned Income Tax Credit – Connecticut

New state tax credit for working poor paid $601 on average, By Mara Lee, January 10, 2013, Hartford Courant: “About 13 percent of Connecticut households worked either so little, or at such low-wage work in 2011 that they were eligible for the new state Earned Income Tax Credit. The average filer’s income was $17,957, according to an analysis released Thursday by the fiscal policy center at Connecticut Voices for Children, an anti-poverty nonprofit. The state helps the working poor by paying them 30 percent of what they can claim on the federal EITC. So the average household gets $2,003 in the federal income tax credit, and $601 from Connecticut…”

Earned Income Tax Credit – Pennsylvania

Dismay as Corbett ends funding for tax-credit program for low-income families, By Alfred Lubrano, August 15, 2012, Philadelphia Inquirer: “The Corbett administration has stopped funding a program that helped low-income working people get federal tax credits that kept them out of poverty. The program, administered by the Department of Public Welfare for just over $500,000, also helped pay for low-income workers to have their taxes prepared free, which saves people at or below the poverty line hundreds of dollars, advocates say. The cut echoes growing concerns among Republicans in Congress about the federal Earned Income Tax Credit (EITC) and other similar measures, seen as too much government in a time of financial crisis. That would be a reversal of decades of bipartisan support for the tax credit, once called ‘the best antipoverty program in America’ by President Ronald Reagan…”

Earned Income Tax Credit – Michigan

Michigan League for Human Services says Saginaw workers will lose most with reduced Earned Income Tax Credit, By Kathryn Lynch-Morin, May 14, 2012, Saginaw News: “Working families in Michigan could see a tax increase from the reduced Earned Income Tax Credit , and Saginaw workers could be hit the hardest, according to the Michigan League for Human Services. A report released Monday by the organization estimates working families in Michigan will see their taxes increase by as much as $244 million in 2013 as the state’s Earned Income Tax Credit is reduced from 20 percent to 6 percent…”

Earned Income Tax Credit

Antipoverty tax program offers relief, though often temporary, By Sabrina Tavernise, April 17, 2012, New York Times: “Karen Spain spent several long months before receiving her tax refund this year in a state of suspended panic. The rent was three months late. Her car’s brakes were shot. And she could no longer afford to pay her electricity bill. So when the refund finally arrived – a $7,200 cash infusion that was about a third of what she earned all last year as an assistant manager at an auto parts store – it brought a certain measure of relief, both financial and psychological. That did not last long. ‘Did we celebrate?’ said Ms. Spain, a 49-year-old mother of two. ‘No. We maintain, that’s all we do. We are just trying to keep our heads above water.’ It is tax time, the season when the country’s largest antipoverty program, the earned income tax credit, plows billions of dollars into mailboxes and bank accounts of low-income working Americans like Ms. Spain…”

Earned Income Tax Credit – Wisconsin, Iowa

  • Increased scrutiny of tax credits could mean more audits for Wisconsin’s poor, By Dee J. Hall, April 12, 2012, Wisconsin State Journal: “As Tax Day approaches, some low-income taxpayers in Wisconsin will notice smaller refunds – and increased scrutiny on claimed tax credits – because of changes in state law and a new effort by the Wisconsin Department of Revenue to ferret out fraud. Wisconsin is the first state chosen under a federal push to detect mistakes and fraud in the earned income tax credit program, Revenue spokeswoman Stephanie Marquis said. The credit, available from both the state and federal governments, is designed to provide relief to low-wage taxpayers and to encourage work by allowing them to claim refunds, even if they have paid little or no income taxes. This year, Wisconsin cut the amount of credit available to such taxpayers by $27.3 million to $113.3 million. The Legislature reduced the projected credit for next year by $28.9 million to $119.5 million…”
  • Branstad would sign earned income tax credit to get property tax deal, By Jason Clayworth and Donnelle Eller, April 5, 2012, Des Moines Register: “A long legislative freeze that has stalled progress on commercial property tax reform in Iowa showed signs Thursday of a political thaw. Gov. Terry Branstad said he would be willing to expand a tax break for Iowa’s poorest working families if he can get an agreement with Democrats to cut commercial and industrial property taxes. And just minutes later, Senate Majority Leader Michael Gronstal said his party wouldn’t insist that the breaks known as earned income tax credits be signed into law before negotiating on the property tax side of the give and take. Branstad twice last year vetoed the tax breaks for working families, frustrating members of both parties. Sen. Joe Bolkcom, a key Democrat involved in the debate, stood on the Senate floor Jan. 31 and vowed that no commercial property tax cut would happen without the governor’s signature on a bill to increase tax breaks for working families…”

Earned Income Tax Credit – Iowa

Senate approves tax break for low-income workers, By Mike Glover (AP), February 14, 2012, Sioux City Journal: “The Iowa Senate has unanimously approved a tax cut for low-income workers Tuesday, with backers calling it a powerful tool against poverty. ‘Iowa’s working families will spend this tax cut in their local communities, buying food, milk, gas, repairing the family car and paying medical bills,’ said Sen. Joe Bolkcom, D-Iowa City, the measure’s main backer. ‘It helps working families. You must have a job to benefit from this tax credit.’ Critics said they would have preferred a broader tax proposal that would not only help the working poor but spark the economy as well. ‘This is just one piece,’ said Sen. Randy Feenstra, R-Hull. ‘I urge the body to put together a full and comprehensive tax plan…'”

Earned Income Tax Credit – Connecticut, Michigan

  • State tax credit for the working poor in heavy demand, By Keith M. Phaneuf, February 13, 2012, Connecticut Mirror: “More than 70,000 Connecticut households took advantage of a new tax credit for the working poor during just the first month of state income tax filings, according to the Department of Revenue Services. The claims filed under the new state Earned Income Tax Credit were hailed both by Gov. Dannel P. Malloy’s administration and a leading private, nonprofit anti-poverty group as evidence of the new program’s necessity as well as its success…”
  • Tax refund is vital chunk of annual budget for many people, By Susan Tompor, February 9, 2012, Detroit Free Press: “For Ola Jones, 53, her federal income tax refund typically amounts to more than an extra paycheck each year. It’s a vital part of her annual budget and a way to cover extra bills and necessities. ‘Right now, I need a washing machine and tires for my car,’ said Jones, who stood in line one snowy Saturday morning in late January to obtain free tax-preparation help at Focus: HOPE in Detroit. Her daughter, Tujuana Jones, 19, also received free tax-preparation help, offered that day by volunteers from the Michigan Association of Certified Public Accountants. The student, who attends Wayne County Community College District and works at Rainbow Clothing in Detroit, planned to go shopping with her $500 tax refund. For lower-income families, the tax season kickoff is a time to catch up with bills and rebuild some savings. The federal earned income tax credit and other Michigan-related tax credits offer a powerful punch for limited budgets…”

Earned Income Tax Credit

IRS encourages people to apply for earned income tax credit, By Rachel McGrath, January 27, 2012, Ventura County Star: “The Internal Revenue Service is urging low- to middle-income earners in Ventura County to find out whether they qualify for a tax credit that could put thousands of dollars into their pockets. The earned income tax credit is intended to help those who work hard but don’t make much money, reporters were told Friday by Verlinda Paul of the IRS. An estimated one in five workers nationwide fail to claim the credit. One of the main reasons Americans don’t apply for the credit is because they don’t know about it, Paul said. The director of the earned income tax credit for the IRS, she spoke to reporters in a conference call. Ironically, many who might be eligible earn so little that they are not required to file a tax return and yet in order to claim the credit, a tax return must be filed and the credit applied for…”

Earned Income Tax Credit – Illinois

Quinn signs earned-income tax credit, By Sophia Tareen (AP), January 10, 2012, Springfield State Journal-Register: “Legislation aimed at helping poor Illinois families keep more of what they earn was signed into law Tuesday, a month after Gov. Pat Quinn signed companion legislation granting tax breaks and incentives aimed at keeping two big employers in the state. The new law, which is effective for the 2012 tax year, expands the state’s earned-income tax credit. It’s now 5 percent of the federal credit and will climb to 7.5 percent next year and 10 percent the year after. State officials said it would eventually translate to an average of about $100 a year per family. Currently about 900,000 families meet income guidelines in Illinois, but some advocates estimated 1 million will qualify this year…”

Earned Income Tax Credit – Wisconsin

Wisconsin one of few states that will raise taxes on poor, By Michael Louis Vinson, December 28, 2011, Appleton Post-Crescent: “As Wisconsinites await W-2 forms and related tax documents, hundreds of thousands of low-income families are bracing for a state budget change that will mean less money in their wallets next year. Last summer, the state Legislature reduced the amount of money low- income families can receive in tax credits by $56.2 million. That places Wisconsin among only a handful of states that will effectively raise taxes on their poorest residents in 2012, according to a recent study by the Center on Budget and Policy Priorities, a nonprofit think tank…”

State Earned Income Tax Credits

  • Malloy touts new tax credit, By JC Reindl, November 23, 2011, The Day: “Gov. Dannel P. Malloy on Tuesday joined Democratic lawmakers and social services advocates to herald the implementation of Connecticut’s new Earned Income Tax Credit for low- and moderate-income individuals and families. The credit was included in the governor’s biennial budget plan that passed the General Assembly this spring. The cost to the state is a projected $110 million this fiscal year. Twenty-five states and the District of Columbia now offer some type of earned income tax credit. Under Connecticut’s program, the approximately 190,000 state households that are eligible for the federal Earned Income Tax Credit will receive an additional credit equal to 30 percent of the federal one…”
  • Taxing the working poor back to starting line, Editorial, November 20, 2011, Detroit Free Press: “As much as younger pensioners may howl about the state income taxes they’ll have to pay come Jan. 1, the hardest hit group of people who file income tax forms may be the poorest — workers whose wages barely bring their families up to the poverty level. That’s because the state’s Earned Income Tax Credit will drop from 20% of the federal payment to 6%. Although this is better than nothing — which, in fact, was what Michigan had until three years ago — it will return the state to the unwelcome status of taxing some people back into poverty…”

Income Inequality in the US

  • Utah has nation’s lowest ‘income inequality’, By Lee Davidson, October 26, 2011, Salt Lake Tribune: “More than any other Americans, Utahns live among neighbors whose incomes are similar to their own. The rich live with the rich, and the poor with the poor. But the overall range of Utahns’ household incomes is relatively narrow, too, with comparatively few who are exceptionally high- or low-income. That’s according to a report released Wednesday by the U.S. Census Bureau looking at ‘neighborhood income inequality’ between 2005 and 2009…”
  • Income inequality lower than average in NW, says Census report, By Jessica Robinson, October 26, 2011, Oregon Public Broadcasting: “New numbers show the gap between the rich and poor has grown across the nation. But income inequality in the Northwest is lower than the national level. That’s according to an analysis released Wednesday by the U.S. Census Bureau. Correspondent Jessica Robinson has more. The report is based on survey data collected between 2005 and 2009 — three years of economic growth, plus two years of recession. It uses three different measurements. And in all of them, Oregon, Idaho and Washington have lower-than-average levels of income inequality. That is, the spread between high wage earners and low wage earners…”
  • Top earners doubled share of nation’s income, study finds, By Robert Pear, October 25, 2011, New York Times: “The top 1 percent of earners more than doubled their share of the nation’s income over the last three decades, the Congressional Budget Office said Tuesday, in a new report likely to figure prominently in the escalating political fight over how to revive the economy, create jobs and lower the federal debt. In addition, the report said, government policy has become less redistributive since the late 1970s, doing less to reduce the concentration of income…”
  • The rich are getting richer, U.S. study says, By Jim Puzzanghera, October 27, 2011, Los Angeles Times: “The rich got richer over the last three decades – and the very rich got very much richer – according to a new government study. The top 1% of households saw their after-tax incomes grow by 275% from 1979 to 2007, said the study by the nonpartisan Congressional Budget Office. That was more than quadruple the growth of the rest of the top 20% of the population during that period. Meanwhile, income for the 60% of households that make up the middle of the income scale increased by slightly less than 40%, the study found. The poor – the 20% of the population with the lowest incomes – saw just an 18% increase…”

State Budgets and Cuts to Services

  • Improved tax collections can’t keep pace with states’ fiscal needs, survey finds, By Michael Cooper, June 2, 2011, New York Times: “Half the states plan to cut spending on higher education, and nearly a third plan cuts to elementary and high schools. Public assistance and transportation face cuts. Eighteen states have proposed slashing aid to struggling cities and local governments. Some states will raise taxes or fees. Others plan to lay off workers, or cut their salaries or benefits. Although state tax collections are picking up after several brutal years, a new survey by the National Governors Association and the National Association of State Budget Officers found that states still expect to collect less tax revenue and spend less money in the coming fiscal year than they did before the Great Recession began. At the same time the cost of Medicaid, the biggest single portion of state spending, has been rising, driven up by higher enrollment as many people have lost their jobs and their health insurance…”
  • Education, social services are big losers in state budget, By Ray Long and Monique Garcia, May 31, 2011, Chicago Tribune: “Education and social services are the losers under a state budget lawmakers put the finishing touches on Tuesday. The $33.2 billion spending plan is about $2 billion less than what Democratic Gov. Pat Quinn wanted. Spending less was on the minds of many lawmakers after they approved a 67 percent increase in the income tax rate in January that was billed as mostly temporary…”

Rural Households and Tax Credits

Tax credits and rural incomes, By Ron Durst and Tracey Farrigan, May 19, 2011, Daily Yonder: “Since 1980, the total cost of tax expenditures has increased by over 250 percent and currently exceeds $1.1 trillion. A primary reason for this growth is that there is greater bipartisan support to enact tax expenditures than to fund or increase direct spending programs, especially since tax expenditures are often viewed as tax cuts. These expenditures have significantly reduced the share of taxpayers who owe Federal income tax. As a result, in 2009, only about half of rural taxpayers owed any Federal income tax. This is slightly below the overall rate of 53 percent of all taxpayers and reflects the lower income levels of rural taxpayers. In 2008, 22 percent of rural taxpayers received a cash payment from one or more of the refundable tax credits. The average amount was $2,428. Thus, an effect of the increased use of the tax code for social policy goals has been an increase in the number of rural taxpayers who owe no Federal income tax and who receive a cash payment as a result of the refundable tax credits…”

States and Tax Revenues

For states, a glimmer of hope on deficits, By Michael Cooper, May 17, 2011, New York Times: “From stronger-than-expected tax collections in deficit-ridden California to projected surpluses in struggling states like Michigan and Pennsylvania, a growing number of recession-weary states are finally announcing a bit of good budget news for the first time since the downturn began. But it would probably be premature to pop the Champagne, or even the prosecco – or to otherwise declare the fiscal crisis that has hammered states to be over. ‘If the question is ‘Are we out of the woods?,’ I think the answer is probably no,’ said Donald J. Boyd, a senior fellow at the Nelson A. Rockefeller Institute of Government in Albany, which closely tracks state tax collections. ‘We’re closer to the edge. But there are still so many things that states and localities need to worry about…'”

Jobless Benefit Legislation

  • In Florida, off-the-job conduct may put your unemployment benefits at risk, By Jim Stratton, May 11, 2011, Orlando Sentinel: “A just-passed overhaul of Florida’s unemployment laws gives employers the ability to challenge jobless benefits to former employees for behavior that has little to do with how they conduct themselves at work. The provision permits businesses to fight a worker’s benefits claim based on ‘misconduct, irrespective of whether the misconduct occurs at the workplace or during working hours.’ In essence, it allows the business to cite a worker’s private behavior as a reason to deny benefits…”
  • Bill could end long-term benefits for jobless, By Marisa Schultz, May 12, 2011, Detroit News: “States could end long-term benefits for laid-off workers and use the money to pay off federal loans for the unemployment benefits under legislation passed Wednesday in the House Ways and Means Committee. States also could use the federal extended unemployment money to pay for federal tax increases on businesses or to start job creation programs. Michigan is to receive $1.3 billion this year from the federal government, which will distribute $31 billion nationally. As a result of the prolonged recession, 29 states owe the federal government a total of $41.2 billion in outstanding loans for unemployment benefits. Michigan, which held the highest unemployment rate in the nation for nearly four years, owes nearly $3.2 billion and must start paying the bill Sept. 30…”