By Francine J. Lipman
This Sunday New York Times editorial caught my eye (and heart) this morning, because I have been researching and writing about state EITCs and lobbying legislators to consider enacting or increasing this demonstrably effective work incentive and antipoverty tool. When I first looked into the issue I was pleasantly surprised to discover that twenty-six states and the District of Columbia have EITCs that build on the antipoverty success of the federal EITC.
Twenty-four of these state EITCs are refundable like the federal EITC, the balance or three states, including Ohio, Virginia, and Delaware, have nonrefundable EITCs. The states with refundable EITCs include California (new for 2015), Colorado, Connecticut, Oklahoma, Oregon, Rhode Island, Wisconsin, Vermont, and the District of Columbia. Washington state has a refundable EITC, but with no current state income tax it has not been funded to date. In addition, there are eight states without any state income taxes on wages including Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, and Wyoming.
Thus, almost 70% or 34 states, plus the District of Columbia, either don’t impose an income tax, offset the income tax, or even subsidize low income wage earners through a negative income tax. State EITCs are simple to administer and implement because they piggyback on the federal EITC traditionally as a percentage ranging from 3.5 to 40%.
With many states increasing sales and property taxes to fill budget gaps due to decreased income taxes, a state EITC is a meaningful strategy to mitigate greater regressive tax burdens on working families. A state EITC is a common sense way to amplify meaningful benefits of federal EITCs that annually lift millions of children out of poverty. Moreover, state and federal EITCs exponentially benefit local businesses creating jobs that generate state and federal tax revenue. The Center on Budget and Policy Priorities has a tool for policymakers considering a state-level EITC here.
In Oklahoma, there are 469,610 families with 910,500 children. Twenty-four percent or 214,481 of these children live in poor families (as compared to 21% nationwide). Oklahoma legislators have just reduced wage subsidies that have demonstrable long-term benefits for working families, especially children, and their Oklahoma communities. Oklahoma that is not O.K.