May 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:

A new report from the Annie E. Casey Foundation: Earned Income Tax Credit Lessons Learned
Since 2003, the Annie E. Casey Foundation has worked with foundations, nonprofit groups and other organizations around the country on a wide-ranging tax-preparation campaign designed to encourage low-income workers to file for the Earned Income Tax Credit. This report reviews the lessons learned from these tax sites around the country.
View the report (PDF)

The Brookings Institution examines trends in EITC recipients
A Local Ladder for Low-Income Workers: Recent Trends in the Earned Income Tax Credit by Elizabeth Kneebone looks at EITC trends between tax years 2000 and 2004, with a focus on EITC filers in cities and suburbs of the nation’s largest metropolitan areas. The report focuses on the changes in EITC receipt, trends in EITC filers using volunteer tax preparation services, and overlap between filers claiming both the EITC and the Child Tax Credit in 2004.
View the report (PDF)

New resources with tax year 2004 data
The Brookings Institution has updated its state-level maps that show EITC receipt by zip code for tax year 2004.
View state-maps

Also updated is data on EITC filers by 110th Congressional District.
View Congressional District data

State Updates:

Connecticut: The Democrats released their revenue and budget package which includes a 20 percent refundable EITC. The tax package was approved by the legislature’s tax committee. Intense budget negotiations will continue over the next several weeks before the legislative session ends at the beginning of June.
Read about the Democrats’ tax package

Hawaii: The Hawaii legislative session ended with enacting two tax cuts that help low-income families, but a state EITC was not one of them. The first bill provides a one-time tax credit for those with an adjusted income under $60,000 and the other bill adds a food and excise tax break for those with adjusted incomes of less than $50,000. The one-time tax credit is on a sliding scale, ranging from $160 for joint filers with adjusted income under $5,000 up to $90 for joint incomes between $50,000 and $60,000. The range for single tax payers is $140 for income under $5,000 and tapers off at $70. The second bill re-labels an existing low-income credit as the “food/excise tax credit,” increases the maximum value of the credit from $35 per exemption to $85 per exemption and increases the income ceiling for the credit from $20,000 to $50,000.
Read about the tax cuts
Read a Honolulu Star Bulletin editorial about the tax cuts

Iowa: The Iowa Legislature passed changes to the state’s 6.5 percent non-refundable credit. The Legislature increased the EITC to 7 percent and made the credit refundable. The Governor is expected to sign the legislation. Making the credit refundable will allow an additional 650,000 households to claim the state credit.

Kansas: Kansas Governor Kathleen Sebelius signed legislation on April 19 that increases the state’s EITC from 15 to 17 percent.
Read a short summary of tax cuts legislation signed by the Governor

Nebraska: During negotiation on the state tax package, an amendment was added that increases the state’s EITC from 8 to 10 percent. The tax package awaits a final reading by the legislature and the Governor’s signature. Newly-elected State Senator Annette Dubas introduced the expansion bill at the request of Voice for Children in Nebraska, and was supported by an extensive coalition already in place from the successful 2006 EITC campaign.

Ohio: Policy Matters Ohio released a report, Dollars That Make Sense, that examines who claims the Earned Income Tax Credit in Ohio, the use of Refund Anticipation Loans and calls for enactment of a state EITC.
Read the report