February 2009

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.

State Updates

Hawaii
Two bills creating a Hawaii Earned Income Tax Credit passed out of the House Human Services Committee and have been referred to the Finance Committee. While the state faces a tough budget situation and budget cutbacks across the board, the Asset Policy Taskforce continues to advocate for a state EITC and other asset building policy legislation during the 2009 session including IDA funding, refund splitting and limits on payday lending.

Louisiana
The Louisiana Child Poverty Prevention Council made a series of recommendations including doubling the state’s Earned Income Tax Credit from 3.5 percent to 7 percent of the federal credit. The nine recommendations will be reviewed during a joint meeting of the House and Senate health and welfare committees.
Read more about the recommendations.

Missouri
A 5 percent non-refundable EITC is gaining support in the Missouri legislature. The Missouri Budget Project, along with numerous other organizations are educating members of the legislature about how a state EITC would benefit more than 440,000 Missouri Households. The Missouri Budget Project has developed a policy brief to help in their efforts.
Read the policy brief.

Montana
The Montana House and Senate are considering state EITC legislation. The bills have been heard before the Senate and House taxation committees and await committee votes. SB 259 would create a credit equal to 15 percent of the federal EITC and HB 360 would create a 20 percent EITC. Numerous members of the Montana EITC coalition testified in support of the legislation and continue their education and outreach efforts in support of Montana’s working families.

North Dakota
Legislation to create a state EITC of 20 percent of the federal EITC was introduced to the North Dakota Senate. In North Dakota, each bill receives a committee hearing and vote and a full Senate vote. The Senate Finance and Taxation Committee heard testimony on the bill and passed a “do not pass” recommendation to the full Senate. When the bill was taken up in the full Senate, Senator Mathern, the sponsor of the legislation introduced an amendment on the Senate floor to amend the legislation to reduce the size of the EITC to 5 percent. The vote to adopt the amendment failed by two votes. The North Dakota EITC coalition continues to educate constituents and members of the legislature about the EITC to continue its long-term goal of seeing a North Dakota EITC enacted.

Oregon
Senate Bill 392 received positive testimony and support during a committee hearing held earlier this month. The legislation would increase Oregon’s refundable EITC from 6 percent of the federal EITC to 18 percent. Oregonians for Working Families, a coalition of more than 70 member organizations continues to build awareness and educate the public and members of the legislature about the importance of the EITC to Oregon’s working families.
Visit the coalition’s website

Utah
Two bills to create a Utah EITC at different levels are alive in the legislature. However, while the policy continues to enjoy some support, the cost of the credit as well as the recent changes to the state income tax structure make passage of any legislation of this type unlikely during the 2009 session.

New Reports and Resources

EITC expansion in federal stimulus package
The federal economy recovery package includes numerous tax benefits for individuals, including a temporary increase in the federal Earned Income Tax Credit. For families with three or more children, the credit will temporarily increase to 45 percent from 40 percent of qualifying earnings. The expansion also includes marriage penalty relief by raising the amount at which the credit begins to phase out for married couples.
Read the Brookings Institution summary of the EITC expansion

National Community Tax Coalition launches advocacy Blog
Work Forward, the new advocacy Blog of the National Community Tax Coalition is dedicated to tax and asset-building policy and advocacy. The Blog provides an open forum for the VITA field to discuss and debate issues affecting low-income workers.

Two EITC toolkits now available
The Center on Budget and Policy Priorities and Corporate Voices for Working Families each released their annual EITC toolkits complete with information about the EITC and other low-income tax credits, outreach materials to use in communities and business and suggestions for running an outreach campaign.
View the Center on Budget and Policy Priorities’ EITC Toolkit
View Corporate Voices for Working Families’ EITC Toolkit