Tax laws and modifications to the Georgia tax code are always major parts of the work of the Georgia Legislature when they convene for their annual session.
This year, as part of that discussion, there are two bills that have been introduced to create a form of an Earned Income Tax Credit in Georgia. In the House, HB 329 would create a 10% nonrefundable tax credit. The Senate bill, SB 172 would create a refundable 10% tax credit. Each has different nuances and ways to ‘pay’ for it. Some may be problematic in that they might make the tax code more burdensome on poor and low income families. As the bills go through the hearing process, those issues will be vetted and discussed at a depth much deeper than we can go here. Alternatives and variations on each original bill are likely and what comes out at the end of the 40-day legislative session remains to be seen.
But hopefully that outcome will be some form of an Earned Income Tax Credit or Georgia Work Credit. That would be a good thing for Georgia. Why you might ask?
As of the end of last year, twenty-six states and the District of Columbia have established state level EITCs to supplement the federal Earned Income Tax Credit. The idea behind the Earned Income Tax Credit is to encourage and reward work as well as offset federal payroll and income taxes. Extensive research has shown that families mostly use the EITC to pay for day to day necessities, maintain their homes, obtain and service vehicles that provide transportation to jobs, and get education or training to get better and higher paying jobs. These help create positive impacts on local economies, create more jobs, and generate tax revenue.
According to the Center on Budget Policy and Priorities, “In 2015, the EITC lifted about 6.5 million people out of poverty, including about 3.3 million children. The number of poor children would have been more than one-quarter higher without the EITC. The credit reduced the severity of poverty for another 21.2 million people, including 7.7 million children. The EITC reduces poverty by supplementing the earnings of low-wage workers and by encouraging work. There has been broad bipartisan agreement that a two-parent family with two children with a full-time, minimum-wage worker should not have to raise its children in poverty. At the federal minimum wage’s current level, such a family can move above the poverty line only if it receives the EITC as well as SNAP (food stamp) benefits.”
In Georgia, a broad coalition of groups is closely watching the progress of the EITC/GWC legislation and discussion. These organizations represent divergent political viewpoints and a broad range of constituencies. St. Vincent de Paul Georgia is strongly supportive of some form of an EITC in Georgia and we will be working to help enact a bill that supports the needs of the low income working poor that we help every day. Last year we supported more than 140,000 people in Georgia with financial, material, and educational support. While we do not have exact numbers now, I can say with a high degree of confidence that many of those would greatly benefit from an Earned Income Tax/Georgia Work Credit. That help would be very beneficial in moving people from dependence and need to stability and self-sufficiency.