State legislators last week were considering a budget that would include an earned income tax credit for lower-income working people. A Senate budget plan, however, leaves out the tax credit modeled on the federal Earned Income Tax Credit, which was created in 1975 to offset effects of federal payroll taxes on low-income taxpayers. Here’s some info:
• About 825,000 N.C. taxpayers — or one in five — will claim the federal credit in 2007-2008. Sixty-nine percent of those taxpayers earned less than $20,000.
• The average family benefit would equal $81 annually, and the most a family could receive is $236 per year.
• The state credit would cost $66 million per year.
• A person with no children working full time at the new state minimum wage would earn too much money to qualify for the earned income tax credit.
• Census data shows that in 2003, the federal tax credit lifted 4.4 million people out of poverty, including 2.4 million children.
Sources: Working Families Win, N.C. Justice Center, John Locke Foundation, Center on Budget and Policy Priorities.
This article appears in Jun 27 – Jul 3, 2007.
