February 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 short alert notifying the network of the news.

National EITC Day – The first ever National EITC Day on February 1, 2007, sponsored by the IRS, brought attention to the federal EITC and gave many state groups a prime opportunity to promote passage of state EITC legislation. At least five governors including Gov. Palin (AK), Gov. Rell (CT), Gov. Granholm (MI), Gov. Sanford (SC), and Gov. Kaine (VA) proclaimed February 1st as “EITC Day” in their states. For National EITC Day, the IRS created a broad selection of resources including a press release issued by U.S. Treasury Secretary Henry M. Paulson and IRS Commissioner Mark W. Everson. Read the press release. The release was picked up by news outlets nationwide.

National Media - Thomas Z. Friedman, a senior adviser to President Bill Clinton and a visiting fellow at the Progressive Policy Institute, wrote a piece in The Washington Post calling for simultaneously increasing the minimum wage and making improvements to the EITC. Read his op-ed: “How to Really Help Low-Wage Workers”

State Updates:

Connecticut: The state EITC coalition continues to build momentum and is gaining support from key legislators and community leaders. At a packed press conference on February 1st, Jodonna Powell, SPEC Territory Manager with the Internal Revenue Service, announced that Governor M. Jodi Rell issued a proclamation to recognize February 1st as Earned Income Tax Credit Day in the State of Connecticut. Advocates continue to work to gain the support of the governor on a state EITC.
Read a new state EITC policy brief by the Connecticut Association for Human Services
Read about the coalition’s work:
“On Job For Working Poor: Advocates Strive Again For Earned Income Tax Credit In State”
“Call Issued for State Earned Income Tax Credit”

New Jersey: New Jersey Policy Perspectives released a report Look Out Below: Steep "Cliff" Means Many Working Poor Lose Tax Credit. The report reviews the state’s EITC and calls for lifting the eligibility requirement that removes the EITC benefit when a family crosses a $20,000-a-year income limit. The report also calls for making the EITC eligible to childless workers and increasing the credit to 25 percent of the federal credit.
Read the report
Read NJPP Executive Director Jon Shure’s op-ed in The Star-Ledger

North Carolina: Enacting a state EITC has gained the support of numerous legislators, the lieutenant governor, and the state treasurer, and has received a positive endorsement by most major newspapers in the state. The North Carolina Budget and Tax Center, an initiative of the NC Justice Center, released a new report on a state EITC. Making Work Pay for North Carolina’s Low- and Moderate-Income Working Families: A State Earned Income Tax Credit for North Carolina, reviews the federal EITC and calls for enactment of a state EITC.
Read the report
Read the Wilmington Morning Star Editorial
Read the Greensboro News-Record Editorial
Read The Fayetteville Observer Editorial
Read The News & Observer Editorial
Read an article in the Wilmington Morning Star

New Mexico: Passage of a New Mexico EITC is looking very promising. The governor endorsed the concept in his State of the State address, and leaders of both houses also support it in slightly different forms. A key objective is to ensure that the final bill does not include a provision that would require families to forego an existing low-income tax credit in order to benefit from the EITC, because that provision would exclude tens of thousands of the poorest families from benefiting.
Read about the effort in the Albuquerque Tribune

Montana: EITC legislation has been introduced in the House and the Senate and recently received hearings in both the House and Senate Taxation Committees. The bill received only supportive testimony and is expected to be up for a committee vote shortly.
Read about the Senate hearing in the Billings Gazette

Hawaii: Prospects for a Hawaii EITC are now better than ever. Leaders of both legislative chambers have announced their support. On Sunday, House Majority Leader Kirk Caldwell published a commentary in the Honolulu Advertiser touting a state EITC. On Wednesday the House Finance Committee held a hearing on a bill that would create a credit equal to 20 percent of the federal EITC, and a Senate leadership bill including a 20 percent EITC also is working its way through committee. The governor’s support remains the big question, but state advocates are optimistic.
Read more about efforts to enact a state EITC in Hawaii

Utah: Tax relief continues to be a priority for the Utah legislature. Enacting a state EITC is one of the tax relief bills being considered. The governor has proposed a tax credit that creates a refundable credit for married taxpayers with incomes below $90,000 if they move onto the flax tax system. The bill also lowers the rate of the flat tax system from 5.35 percent to 5 percent. Some sort of tax relief will hopefully be passed this year, but it is unclear if the EITC will be the measure of choice.

Ohio: Rep. Mike Foley has introduced EITC legislation which has received the support of the state treasurer. A state-wide coalition is forming to advocate for passage of the state EITC.
Read about the proposal

Iowa: The governor included expanding the state’s EITC in his recent budget proposal. The proposal calls for increasing the state’s 6.5 percent non-refundable EITC to a 10 percent non-refundable credit. A current Senate study bill calls for increasing the EITC and making it refundable. It is likely that an expansion of the state’s EITC will happen during this legislative session and advocates are working to ensure that the credit becomes refundable as well.