August 2006

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.

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As a result of growing revenues in many states, a changing political climate, and new state initiatives to cut and raise revenues, an increasing number of states are taking action to enact or expand a state Earned Income Tax Credit during the 2007 legislative session.

Northeast

Connecticut: State EITC legislation nearly passed during the 2006 legislative session, but other tax bills took priority in the end. A broad coalition led by the Connecticut Association for Human Services continues its educational efforts throughout the state and is making plans to again advocate for a state EITC in the 2007 legislative session.

Rhode Island: Rhode Island currently has an EITC equal to 25 percent of the federal credit, however only a portion of the credit is refundable. During the 2006 legislative session, the Rhode Island Legislature successfully expanded the state's refundable portion of the EITC from 10 percent to 15 percent of the state credit. One Rhode Island, a coalition of more than 160 human services organizations, includes the further expansion of an Earned Income Tax Credit in their annual legislative platform. While they are pleased with the success in the 2006 session, the group hopes to see the refundable portion of the EITC expanded to 20 percent in 2007.

New Jersey: New Jersey's EITC is currently set at 20 percent of the federal credit but only for families that make less than $20,000. In addition, childless workers are not eligible for the state's EITC. Advocates continue to work to increase the threshold at which families are eligible for the EITC and to make all workers eligible.

Midwest

Ohio: EITC legislation was introduced in January 2005, but remains in the Ways and Means Committee. Advocates in Ohio continue to educate both legislators and the state's gubernatorial candidates. The outcome of the November elections could make a significant impact on legislative priorities for the state. The Cuyahoga County EITC Coalition reports significant gains in filings at their VITA sites for the previous tax season. Nearly $3 million in total refunds and more than $1.3 million in EITC dollars were returned to 2,300 families. Policy Matters Ohio will be releasing a report in the fall that discusses the impact of the EITC and VITA sites for the state along with other state data.

South

Georgia: Through a policy fellowship from The Center for a Better South, the Georgia Budget and Policy Institute recently wrote a new resource: "Doing Better: Progressive Tax Reform for the American South." The book examines tax and budget issues in Southern states and presents 11 ideas for progressive tax reform. Creating this resource kicks off an effort to educate and advocate for progressive tax reform, including creating a state EITC in Georgia. Download or order the book: http://www.bettersouth.org/doingbetter/

West

Hawaii: EITC proposals gained momentum over the last two legislative sessions; however the Hawai'i legislature, as yet, has not adopted a state EITC. During the 2006 session, the EITC was one of three tax proposals being considered and ultimately the legislature and the Governor passed other forms of general tax relief. Advocates continue to evaluate options for a future EITC campaign in the 2007 session.

Utah: Tax reform was a priority for the Utah legislature in 2006, but was left unfinished at the end of the session. Income tax reform will continue to be a priority for the Governor and the Legislature in 2007. A coalition led by Voices for Utah Children is making the state EITC a legislative priority for 2007. The group plans to take advantage of political candidate briefings in the fall to educate all candidates on the Earned Income Tax Credit.

Montana: A group of legislators and advocates are joining together to make enactment of a state EITC a top priority in 2007. EITC legislation was most recently introduced during the 2001 legislative session.

New Mexico: A 7.5 percent refundable EITC was supported by Gov. Bill Richardson and the Speaker of the House during the 2006 legislative session. While the credit did not make it into the final tax package this year, it is hopeful that the credit will pass during the 2007 legislative session. A coalition of advocates including New Mexico Voices for Children plans to make the EITC a legislative priority in 2007. They hope to increase the proposed EITC to 10 percent of the federal credit and to make it in addition to an already existing tax rebate, rather than having to choose between the two as the Governor proposed last year.