by Kevin Osborne
Think tank: EITC would help working families
A nonpartisan think tank that
advocates for poor and working class families is urging that Ohio adopt its own
version of the federal Earned Income Tax Credit (EITC).
The group, Policy Matters
Ohio, said a state version of the federal tax credit, set at 10 percent, would divert
just $210 million from Ohio’s coffers but would benefit 949,000 low-income
working families across the state. Such a credit would provide families with an average of $221
each, which Policy Matters Ohio described as “modest but helpful.”
Currently 24 states and the
District of Columbia have Earned Income Tax Credits, ranging from 3.5 percent
to 50 percent of the federal credit.
“A state EITC program enables
families to work and build assets while reducing the impact of regressive income
tax changes,” said a statement released by Policy Matters Ohio.
“A state EITC makes sense
because recent changes to the personal income tax have provided greater tax
reductions for higher-income earners than they have for lower- and
middle-income families,” the statement continued.
The federal EITC is a refundable tax credit for low- and
medium-income individuals and couples, and is considered the nation’s largest
poverty relief program. When the credit exceeds the amount of taxes owed, it
results in a tax refund to those who qualify and claim the credit.
To qualify for the EITC, a recipient
must have earned income of $49,000 or less. The credit is worth significantly
more for families with children and is refundable, which means families receive
cash refunds above their tax liability.
Created in 1975, the federal
EITC is aimed at helping lift families with children about the poverty level,
along with offsetting the burden of Social Security taxes and maintaining an
incentive for people to work.
In Ohio, 949,692 people
currently claim the federal EITC. The credit generates $2.1 billion for state
residents, and the average refund is $2,211.
Founded in 2000, Policy
Matters Ohio is a nonprofit, nonpartisan policy research organization that
seeks to create “a more prosperous, equitable, sustainable and inclusive Ohio,”
through research and policy advocacy.
Based in Cleveland and
Columbus, the organization is funded primarily through grants from groups like
the Ford Foundation, the Sisters of Charity Foundation, the Center on Budget
and Policy Priorities, the Corp. for Enterprise Development and others.