Family advocates back a state earned income tax credit | Arkansas Blog

Monday, November 10, 2014

Family advocates back a state earned income tax credit

Posted By on Mon, Nov 10, 2014 at 6:45 AM

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Arkansas Advocates for Children and Families has published a brief on the benefits of a state-level earned income tax credit as a boost for low-income working families.

Such programs have worked in other states. It's an extension of the federal plan of giving money back to poor people from their payroll taxes. 

It's fair.

Taxpayers making less than $15,000 a year pay 12 cents in state and local taxes for every dollar they earn while those making more than $311,000 a year pay just six cents.3 To say that this is fair would be a bit of a stretch. Arkansas has the tenth highest tax rate for the poor, yet unlike about half of the states in the US, there is no state level EITC to help balance out the bottom-heavy tax system.4 A state level EITC in Arkansas would mean a more fair tax share for low- income Arkansans, fewer families living in poverty, and a boost to our local economy and tax revenue.

The money goes into the economy instantly. It provides a margin for people who need it most. The states with EITCs pay from 20 to 40 per cent of the federal credit.

I could explain more, but — even though the EITC enjoys support even from many conservatives — it seems dream-like in the current political world. Incoming Gov. Asa Hutchinson wants to cut taxes and his plan targets middle income workers. He said during the campaign that we already give enough tax preferences to people at the lower end of the income ladder.

I'm glad Arkansas Advocates will be soldiering on. Their friendly, persistent work might bring some people around.

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