June, 2003

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. Additional information on the federal EITC can be found at: www.eitc.info.

Feel free to forward this newsletter to your interested associates and to email sarah@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.

In this edition of the policy update:

• State EITC Website Launched
• Connecticut Report Outlines Potential Benefits of State EITC
• CBPP Creates New Special Report Series on Precertification
• Rangel Sponsors Bill to Prohibit Precertification Requirement
• Congressional Testimony Suggests Alternatives to Precertification
• Major Newspapers Chronicle Efforts Around New Compliance Initiative
• Brookings VP Speaks to NGA on State Contribution in the EITC Process

State EITC Website Launched

With support from the Charles Stewart Mott Foundation, the Hatcher Group has launched a new website dedicated to providing easy access to research and resources about state Earned Income Tax Credits and efforts to enact the credit in particular states. The new website features a 50-state resource map with pop-up boxes that include information about a state’s EITC or efforts to enact one and a contact person for more information. Other resources include state materials created by various groups across the country that can be used as templates to develop new materials, research and resources from national experts on the state and federal EITCs, and a page dedicated to issues around the IRS precertification proposal.

Go to: http://www.stateEITC.com

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Connecticut Report Outlines Potential Benefits of State EITC

In March, Connecticut Voices for Children issued “The Earned Income Tax Credit: Why Does Connecticut Lag Behind Its Neighbors?” The 43-page report describes of the federal EITC in Connecticut and the advantages of a Connecticut state EITC. It also contains annotated maps and charts that show the amounts and geographical distribution of federal EITC benefits in Connecticut, and the accompanying benefits of a state EITC if one were to be enacted.

Go to: http://info.med.yale.edu/chldstdy/CTvoices/kidslink/kidslink2/reports/PDFs/EITC%20Report.pdf

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CBPP Creates New Special Report Series on Precertification

The Center on Budget and Policy Priorities has created a special report series on the Internal Revenue Service’s precertification proposals for the EITC. The series includes reports ranging from “Overview: New IRS ‘Pre-Certification’ Requirements Could Prevent Many Eligible Families from Receiving the Earned Income Tax Credit” to “What is the Magnitude of EITC Overpayments?” The website also features draft versions of the new IRS forms and instructions for precertification.

Go to: http://www.cbpp.org/eitc-precert.htm

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Rangel Sponsors Bill to Prohibit Precertification Requirement

On April 30th, Congressman Rangel (D-NY) introduced HR 1894 to prohibit the implementation of discriminatory precertification requirements for the earned income tax credit. The bill says the precertification program discriminates against low-income people and could possibly lead to taxpayer profiling. HR 1894 currently has 21 co-sponsors and has been referred to the House Committee on Ways and Means.

Go to: http://thomas.loc.gov/cgi-bin/bdquery/z?d108:HR01894:@@@L&summ2=m&

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Congressional Testimony Suggests Alternatives to Precertification

Two advocates recently testified to Congress regarding the new IRS EITC compliance initiatives. On March 25th, David Marzahl, executive director of the Center for Economic Progress, submitted testimony the House Ways and Means Committee and urged the IRS to scrap its precertification proposal. Instead, he recommended the IRS focus on reducing errors by paid tax preparers who complete 68 percent of all EITC returns, simplifying the tax code and increasing outreach and education efforts to EITC-eligible taxpayers. On May 7th, Robert Greenstein, executive director of the Center on Budget and Policy Priorities, testified to the Subcommittee on Transportation and Treasury Committee on House Appropriations on the Center’s concerns with the IRS precertification proposal.

For Marzahl’s testimony, go to: http://waysandmeans.house.gov/hearings.asp?formmode=view&id=298

For Greenstein’s testimony, go to:
http://www.stateeitc.com/precertification/Testimony%20from%20Robert%20Greenstein.doc

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Major Newspapers Chronicle Efforts Around New Compliance Initiative

A number of major newspapers, including the New York Times and the Washington Post have run major articles and opinion pieces about the Internal Revenue Service’s precertification plans. Copies of these articles can be found on the Online Resource Center’s Precertification page.

Go to: http://www.stateeitc.com/precertification/index.asp

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Brookings VP Speaks to NGA on State Contribution in the EITC Process

At a recent speech to the National Governors Association Committee on Human Resources, Bruce Katz, vice president and director of the Center on Urban and Metropolitan Policy at the Brookings Institution, encouraged states to do more to leverage the EITC in this time of fiscal crisis. The Brookings Institution is preparing a report and a spatial distribution map for each state to show how the federal EITC is allocated. Katz hopes that these maps will help states develop targeted and cost effective strategies for leveraging the EITC.

Go to: http://www.brook.edu/views/speeches/katz/20030223.htm

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