Report: Extending, enhancing earned income tax would impact 618,000 Ohioans

Ronald Reagan called Earned Income Tax Credit “the most effective anti-poverty program in the U.S.”
Norwalk Reflector Staff
Mar 22, 2014

U.S. Sen. Sherrod Brown (D-Ohio) has released a new report showing that strengthening and enhancing the Earned Income Tax Credit (EITC), which Ronald Reagan called “the most effective anti-poverty program in the U.S.,” would impact 618,000 Ohioans; sixth most in the country.

Brown is the author of the Working Families Tax Relief Act, legislation that would answer the call of the Administration and leading Republicans by making permanent enhancements to the EITC and expanding its eligibility to workers without children. By doing so, Brown’s bill would make 308,000 Ohioans eligible for the EITC and increase benefits for another 310,000. In fact, seven Ohio metropolitan areas rank in the national top 100 for the  number of workers who would be impacted: #24 Cincinnati, #26 Cleveland, #32 Columbus, #57 Dayton, #58 Toledo, #60 Akron, and #85 Youngstown.

“The Working Families Tax Relief Act would ensure that Americans who work hard and take responsibility can take home more of their pay each month,” Brown said. “By strengthening the EITC, and expanding its eligibility to workers without children, we can help create a path to the middle class for 618,000 Ohioans. Rewarding Americans for hard work and providing them greater opportunities should be a bipartisan goal. This new Brookings report is further evidence of that.”

The EITC is a refundable tax credit that encourages work, helps families make ends meet, and leads to healthier, better educated children. In 2012, more than 27 million taxpayers received nearly $62 billion in EITC benefits. In 2011, according to the Internal Revenue Service (IRS), the EITC lifted 6.6 million Americans out of poverty, 3.1 million of whom were children—with the average EITC family claiming an average of $2,200. But in contrast to the EITC for working families with children, the EITC for workers without children remains extremely small—too small even to fully offset federal taxes for workers at the poverty line. Under current law, workers without children or noncustodial parents working full-time are only eligible to receive a minimum benefit. Such an individual would receive the maximum EITC if he or she had children. As a result, low-wage workers not raising minor children are the only Americans taxed into poverty.  

But according to a new report by the Brookings Institution, passing the Working Families Tax Relief Act would:

Nationally:

Increase the number of eligible EITC workers without children by 7,617,000
Increase the EITC benefits for 7,575,000 workers without children
Impact, in total, 15,192,000 workers without children
Increase the monthly EITC benefit by $450
Make the average monthly EITC benefit $710

In Ohio:

Increase the number of eligible EITC workers without children by 308,000
Increase the EITC benefits for 310,000 workers without children
Impact, in total, 618,000 workers without children
Increase the monthly EITC benefit by $450
Make the average monthly EITC benefit $710

That is because the Working Families Tax Relief Act would: 

· Strengthen the Earned Income Tax Credit: The legislation would expand access to the credit, allowing a full time worker receiving the minimum credit to be eligible for the maximum EITC. The bill will also make the credit available to workers without children.

· Change the Eligibility Age: Under current law only individuals older than 25 and younger than 65 are eligible for the childless component of the EITC. The legislation would make individuals older than 21 and younger than 65 eligible.

As a result, the Brookings Institution concludes that, “…it is clear that strengthening these two key components of [the Working Families Tax Relief Act ]—broadening the age range over which workers qualify for the credit and increasing the maximum credit and phase in/out rates—would significantly increase the EITC’s impact for millions of workers without qualifying children. Modernizing this provision of the EITC by enacting these expansions would help ensure that the credit is as effective a work incentive and poverty alleviation tool for childless workers as it continues to be for working families.”

In April 2013, Brown and U.S. Sen. Dick Durbin (I-IL) were joined in cosponsoring the Working Families Tax Relief Act with then Senate Finance Committee Chairman, Max Baucus (D-MT), and current Chairman, Ron Wyden (D-OR). In total, 33 Senators are co-signers of Brown’s legislation, including 9 from the Senate Finance Committee. Also in April 2013, a coalition of 300 organizations nationwide wrote a letter to Brown and Durbin in support of the bill and its efforts to preserve and strengthen the EITC.

Comments

Contango

Re: "they should pay the same tax rate,"

The top marginal federal income tax rate is: 39.6%

Also add state & local income taxes. In some states this can be a total of 60%.

Plus, add in FICA and Medicare taxes.

That's not enough for the Washington kleptocrats?

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Re: "loop hole provisions."

Such as?

One person's "loop hole" is another's subsidy.

For one: Shall we end mortgage deductions? It's unfair to renters.

Broaden the base and lower the marginal rate.

See: Simpson-Bowels. Good start for debate.

http://www.fiscalcommission.gov/

If it were up to me, I'd scrap the whole 16th Amend. and look at some form of progressive consumption tax.

jas

For those who don't know, "broadening the tax base" is code by conservatives for taxing the poor more. It really makes sense to tax those who have the least more. Of course, they also thought that tax cuts during wartime was a good idea. The only President to cut taxes during war was George Bush. No other President ever did it because it's just plain stupid. And then they want to complain about the deficit. Hypocrites.

Contango

Re: "broadening the tax base"

See: TRA 86. It was bi-partisan.

Simpson-Bowles uses a similar approach.

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Re: "The only President to cut taxes during war,"

Since Pres. Obama made 97% of the Bush era tax cuts permanent, they are now HIS tax cuts aren't they?

In my opinon

Re: "they should pay the same tax rate,"

The top marginal federal income tax rate is: 39.6%
Then why did Mitt pay 9.3 to 11% if middle class pay 39.9. TAX LOOPHOLES..

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