April 2007

The State EITC Online Resource Center is pleased to present its electronic newsletter on current policy developments around state and federal Earned Income Tax Credits. For more information, please go to: www.stateeitc.com.

Feel free to forward this newsletter to your interested associates and to email amy@thehatchergroup.com with news, information or other resources to be added to the update. If you do not want to receive this newsletter in the future, please reply with the word UNSUBSCRIBE in the header.

With the legislative session in full-swing for many states, and the abundance of EITC legislation being considered, the state EITC online resource center will provide policy updates once a month during the first part of 2007. As individual states pass an EITC we will send a brief alert notifying the network about the news.

Reports and Resources:

New Report on the "Overpayments" Issue
The Center on Budget and Policy Priorities released a report which addresses the concern by some state policymakers that the federal EITC has a high rate of overpayment. The paper demonstrates that the rate of overpayment has been exaggerated.
Read State Earned Income Tax Credits and the "Overpayments" Issue

New Report on the Impact of State Income Taxes on Low-Income Families
A new report from the Center on Budget and Policy Priorities reviews the rate at which states tax low-income families. Recommendations for how states can eliminate the tax burden on low-income families also are included.
Read The Impact of State Income Taxes on Low-Income Families in 2006

State Updates:

Iowa: The Iowa House Ways & Means Committee unanimously passed a 7 percent refundable EITC. Iowa currently has a 6.5 percent non-refundable credit. Making the credit refundable will allow an additional 650,000 households to claim the state credit. Legislators on both sides of the aisle are interested in making the credit refundable.
Read an op-ed by Mike Owen, assistant director of The Iowa Policy Project
Read an editorial by the Iowa City Press-Citizen

Kansas: The Kansas Legislature passed a tax package that includes expanding the state’s refundable EITC from 15 to 17 percent. The bill was sent to Governor Kathleen Sebelius for consideration.
Read about the tax package

Montana: The Senate Taxation Committee amended SB400 (to create a 15 percent refundable EITC) to a 10 percent refundable EITC and unanimously voted it out of committee. The bill passed the second vote on the Senate floor but then was re-referred to the Senate Finance and Claims Committee. The committee again amended the bill to reduce the amount to 5 percent but then voted it out of committee back to the Senate floor. The Senate passed the bill and now the legislation heads to the House.

New Mexico: In the final hours of the legislative session, New Mexico Gov. Bill Richardson signed legislation that creates a state Earned Income Tax Credit. The refundable credit, named the Working Families Tax Credit, will be set at 8 percent of the federal EITC and will benefit an estimated 200,000 New Mexico families.

Oregon: The Oregon Center for Public Policy released a report calling for the expansion of the state’s EITC. Two bills introduced during the 2007 legislative session - HB 3023 and HB 2398 - would expand Oregon's EITC to 12 percent, which would eliminate income taxes on most working families with one or two children living under the poverty line.
Read Working, Poor and Taxed: Improving Oregon’s Earned Income Tax Credit