Earned Income Tax Credit in Georgia a must
By John Berry, Chief Executive Officer, St. Vincent de Paul Georgia
The federal Earned Income Tax Credit is one of our nation’s most successful anti-poverty measures and enjoys widespread bipartisan support. Assistance takes the form of tax credits of up to $5,716 to poor working families with children. The credits are refundable, meaning that low-income taxpayers with no federal tax liability receive the credit as a refund. Numerous studies have shown the efficacy of the EITC – it promotes work, it lifts families out of poverty, the program’s administrative costs are low, and it is linked to better educational and health outcomes for recipient families.
Recognizing the success of the federal program, 29 states have enacted their own state-level EITC’s, modeled after the federal tax credit. Georgia is not one of them. State EITC’s range from 5% of the federal EITC amount (Louisiana) to 85% (California). The programs are relatively simple to administer as they are designed to work within the existing tax codes – approximately 99% of the benefit goes directly to the recipients.
In the 2019 Georgia legislative session that just adjourned, House Bill 588, sponsored by five Republican state lawmakers, was introduced. HB588 would have provided poor working Georgia families with a non-refundable tax credit of 10% of their federal EITC amount, thus reducing taxes for Georgia’s poorest workers. Unlike the federal EITC, as a non-refundable credit the proposed Georgia EITC would not result in a refund to taxpayers who owed no taxes. Unfortunately, the bill stalled and never made it to a point of debate and consideration for a vote.
Let’s set our eye on the 2020 Legislative session and make an effort to put a Georgia Work Credit in place. It is time for Georgia lawmakers to step up to the plate. The lowest-income Georgia taxpayers pay a disproportionately higher share of their income for state and local taxes (10.7%) than the top 1 percent of taxpayers who pay an average of 7% of income for taxes. That is fundamentally unfair. The Georgia Budget and Policy Institute estimates that 700,000 poor Georgia taxpayers would be assisted if the state enacted a non-refundable credit and 1.1 million taxpayers would benefit from a refundable credit. Tax relief for low-income working families in Georgia is long overdue.
A refundable State EITC makes sense for Georgia and would be a worthy goal for our lawmakers to accomplish in the next session. While it is still 9 months away, it’s never too early to do what it takes to be ready to do what is right once the session kicks off.