Groups Push for Low-Income Tax Credit

By Gutman, David | Charleston Gazette Mail, January 12, 2016 | Go to article overview

Groups Push for Low-Income Tax Credit


Gutman, David, Charleston Gazette Mail


There will be no major proposals coming this year from the Republican Legislature's new Joint Committee on Tax Reform, although a coalition of community organizations is pushing for a tax credit specifically aimed at low-income workers, a proposal with possible bipartisan support. Sen. Mike Hall, R-Putnam and a co-chairman of the tax reform committee, confirmed Monday that they would make no major proposals, but said that if the Legislature gets in budget negotiations with the governor, that could "open up some of the work they did toward tax reform.

Hall spoke at a forum on establishing a state earned income tax credit (EITC) in West Virginia.

Twenty-six other states have a state EITC, a tax credit for low- income people that has the support of both parties. Democrats tend to like the EITC because it is a safety net program, effective at raising the incomes of the working poor. And Republicans tend to like the program because you must already have an income to qualify - it only goes to people who are working and is designed not to discourage work.

The EITC is kind of like a negative income tax. Instead of the government taking away a percentage of your pay, as with an income tax, the government pays back a certain percentage of your pay, up to a certain point.

The more money low-income workers are able to make in wages from a job, the more the government will aid them in a tax credit, until it phases out as workers' earnings approach "middle income.

About 157,000 West Virginia families received an average of about $2,200 last year from the federal EITC, according to Joseph Hotz, a Duke University economist who studies the tax credit.

Every state EITC functions as a percentage of the federal EITC, a program that was made permanent in Congress' budget deal last month.

So, if West Virginia was to enact a state tax credit at 15 percent of the federal one, low-income workers would receive a credit on their state income tax equal to 15 percent of the federal tax credit they receive.

Going by Hotz's numbers that would mean an additional state tax credit of about $335 for the average low-income family, with a state EITC. …

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