Well, pretty slow day at the legislature. Most of the talk was how bad tomorrow's storm might be and many took off for home a day early. We did hear this afternoon from Labor Commissioner Cherie Berry that the Council of State will take up the execution and doctor issue Tuesday at its regular meeting. Monday the House Select Committee on Capital Punishment also meets.
Meanwhile, lawmakers continue to file bills. Wednesday, several groups and lawmakers pushed for a state earned income tax credit. Interestingly newly elected House Speaker Pro Tem Representative William Wainwright spoke on behalf of Lt. Gov. Beverly Perdue. Not long after, State Treasurer Richard Moore sent out his own release in support of it. Both are considered Democratic hopefuls for the Governor's mansion. Republicans also put in their two cents against the EITC shortly after. Here's all three releases sent to me.
1. From the NC Justice Center
"(RALEIGH) – State Representative Jennifer Weiss, along with several statewide advocacy organizations and other legislators, called for the creation of a North Carolina Earned Income Tax Credit to build on the successful federal EITC. Weiss also encouraged North Carolina’s working families to file for the federal EITC if they are eligible.
“Nearly 750,000 North Carolina tax filers and their families claimed the federal EITC in 2003, receiving an average of $1,800 per family,” said Weiss, a Democrat from Wake County. “It is the nation’s most effective and efficient program for helping low- and moderate-income working families. A state EITC will only add to its benefit.”
“Unfortunately, tens of thousands of eligible North Carolina families don’t file for the EITC, leaving more than $100 million unclaimed,” according to Lucy Gorham, director of EITC Carolinas, a project of MDC Inc. “In all 100 North Carolina counties, free tax services are available that can help families determine if they’re eligible for the EITC and help them file.”
An Earned Income Tax Credit is a tax reduction and a wage supplement for low- and moderate-income working families. The federal government administers the EITC through the income tax system. Because of the success of the federal EITC, 19 states and the District of Columbia have coupled a state EITC to the federal credit.
With the exception of Minnesota, the state EITCs are modeled on the federal, using the same eligibility requirements, and are set as a percentage of the federal credit. For example, a married couple with two children and an income of $17,390 would get the maximum federal EITC of $4,716. With a state EITC set at 10 percent of the federal credit, that same family would get a $472 credit on their state taxes.
The NC Budget & Tax Center issued a report at today’s event titled Making Work Pay for Low- and Moderate-Income Families: A State Earned Income Tax Credit for North Carolina. The report details the benefits and costs of implementing a North Carolina EITC, including data showing the benefit to each county.
“A state EITC would increase the impact of the federal EITC, further supplementing wages and improving tax fairness for low- and moderate -income working families,” said Meg Gray, author of the report and tax policy analyst at the NC Budget & Tax Center, a project of the NC Justice Center.
The report finds these critical points:
· The EITC is targeted to help those who need it most. Sixty-nine percent of North Carolina families that claim the federal EITC earn less than $20,000 annually. These same families would benefit from a state EITC.
· A state EITC would further the federal EITC’s benefits. In fiscal year 2007-2008, a North Carolina EITC set at 10 percent of the federal EITC would provide close to $134 million to North Carolina working families, with an average benefit of $163.
· A state EITC would improve tax fairness by reducing the disproportionate share of income that low- and moderate-income workers pay in state and local taxes. In 2003, the bottom 20 percent of North Carolina taxpayers paid 10.9 percent of their incomes in state and local taxes while the top 1 percent of taxpayers paid only 6.3 percent.
“A North Carolina state Earned Income Tax Credit would enhance economic security and provide workers with more income to pay for basic expenses,” added Gray. “In particular, a state EITC is an effective tool to improve fairness in North Carolina’s tax system, reducing the high proportional share of state and local taxes shouldered by the lowest-paid workers. A combined federal and state EITC would make a significant difference in improving the lives of more than 800,000 low- and moderate-income workers and their families in North Carolina.”
2. From Moore's office
RALEIGH – On the eve of National EITC Day, State Treasurer Richard Moore issued the following statement in support of a state Earned Income Tax Credit (EITC). Throughout his tenure as Treasurer, Moore has been active in encouraging North Carolinians to claim their federal EITC and in publicizing the availability of free tax assistance through Volunteer Income Tax Assistance (VITA) and other sites.
“Now that we have raised the minimum wage, it is time to take the next step and enact a state earned income tax credit to help North Carolina’s working families,” Moore said. “One in five North Carolina tax filers received the federal EITC in 2003, showing the power of this credit to touch families across our state. With just a 10 percent match of the federal EITC, we could put an additional $136 million into working families’ pockets. This is a policy that rewards honest North Carolina values – hard work, family and doing what is right.”
3. From Republican Senator Eddie Goodall
Democrat legislators today unveiled a plan highlighting bills entitled “Rewarding Work Tax Credit,” which is touted as tax relief for working families. Both the Senate and House companion bills would allow 5% of the Federal Earned Income Tax Credit (EITC) for North Carolina workers, effectively creating a North Carolina version of the Federal EITC.
The Federal EITC was established in 1975 as an incentive for people to work by adding a tax break for people with lower incomes. The credit would phase out as their income increased. The credit later became refundable and has escalated to a federal maximum of $4,400. Federal credits claimed for N.C. workers totaled $1.3 billion in 2003.
With the proposed North Carolina EITC, five percent of the federal total would distribute around $65 million in state credits to North Carolinians, paid from North Carolina’s General Fund Budget and funded by taxpayers not receiving the credit.
Senator Eddie Goodall (R-District 35) made the following comments regarding the bill:
“The suggested EITC bill sounds nice, but has a serious flaw. Of the $65 million, only $6.5 million would be tax relief, while the other $58.5 million would be a cash subsidy or a welfare transfer due to a problem in the bill.
“Because this allows any excess over and above an individual’s North Carolina income tax to be refundable, it means even after a taxpayer pays no North Carolina income tax, they would get a bonus paid for by everyone else. Instead, we should take the $58,500,000 windfall and provide a true tax break to hundreds of thousands who, under the Democrats’ version, would see no tax relief at all.
“The refundable credit would cost the state $800,000 to $1.3 million annually just to manage. Spending a million dollars for another government subsidy that only supplies workers tax relief of $6.5 million is not smart.”
Goodall is offering plans to the bill’s sponsors to correct the refundable flaw in their proposal and to create a new “N.C.’s Future” child tax credit of $100 for every child in a lower income household. The Federal government already has a similar credit of $1,000 per child but North Carolina has no such tax break for families with children.