EITC: Families and Kids Need This Legislation

It has been described as the most effective anti-poverty program in the U.S.  So state Reps. Jim Wayne and Harry Moberly yesterday introduced legislation to create an Earned Income Tax Credit (EITC) in Kentucky.

House Bill 257 would benefit  more than  350,000 Kentuckians whose annual income — despite full-time work in most cases —  still leaves their family struggling financially.

"It doesn't take a genius  to see that now more than ever families and communities need this legislation," said Sam Hall, Perry County KFTC member and father of three, who spoke with  Rep. Wayne and others  at a press conference on Tuesday. Hall said he and his family have benefited in significant ways from the federal EITC that has been in place for more than 25 years.

"Every spring my EITC money helped me afford to go back to school and raise my kids. Sometimes it would pay the rent ... and it would help with school clothes.  I used it and it helped me."

Many states — but not Kentucky — have their own versions of an Earned Income Tax Credit.  HB 257 would establish a Kentucky EITC at a defined percentage of the federal credit. This would channel about $45 million a year to working poor families, helping to address rising costs of gasoline, heat and housing, and being a direct stimulus for local economies.

"A state EITC would mean a lot to Perry County," Hall added. Recipients would be "paying their bills with this money. They'd spend it right there in the county."

There actually are two bills that would establish the EITC. House Bill 223 (Rep. Wayne and 9 cosponsors) is a broader tax reform measure that would raise more than $300 million in new revenue and use $90 million for an EITC at 15% of the federal benefit.  HB 257 pays for an EITC by restoring the estate tax, which would raise an estimated $44 million annually, and would pay for an EITC at  7.5% of the allowed federal tax credit.

The Kentucky estate tax was phased out in recent years by Congress even though the General Assembly took no such action. Both HB 223 and HB 257 would restore the estate tax, with HB 257 using it as a source of funds for the EITC.

Both bills are in the House Appropriations and Revenue Committee.

A measure similar to HB 257 passed the House committee last year, but Democratic House leaders never allowed the bill to come to the floor for a vote.

Here is a video of Sam Hall at Tuesday's press conference in Frankfort.