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An Act to Improve the
Earned Income Credit for Working Families, H.3036
Clarice B. Gordon,
LWVM Meeting Basic Human Needs Specialist
Urge your legislators to support “An Act To Improve the Earned
Income Credit for Working Families,”
H.3036, which would increase the Massachusetts Earned Income Credit (EIC) to 30%
of the federal EIC instead of the current 15% credit, as well as promote
participation of additional eligible workers through workplace education.
Lead Sponsor:
Representative J. James Marzilli
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Background:
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The federal government would continue to
set requirements and determine the basic amount of the Earned Income Credit.
The amount of the credit increases as income increases up to a certain
level, levels out and then decreases until it is phased out entirely. (The
table is contained in current Income Tax Instructions and in Internal
Revenue Service Publication 596.)
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Spending to lift incomes of very poor families through the payroll system
helps to prevent other state expenditures on homelessness and transitional
assistance (welfare).
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The maximum EIC amount is reached at $11,750
for those with two or more children, $8,350 for one child families, and
$5,500 for individuals. When incomes are higher, the EIC is the same amount
or less. The maximum 2007 Adjusted Gross Income to qualify for any credit (as low as $2
for the year) was $39,783 for a married couple with two or more children, down
to $12,550 for an individual with no children.
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The
state expenditure for the EIC would be
balanced by more than three times as much money coming to poor families from
the federal government and likely spent locally. Additional funds spent may
be recovered by successful outreach to eligible workers who have not
benefited in the past.
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Three other states now grant at least 30% of the federal EIC
(Vermont,
New York and
Minnesota). Nineteen
states plus the
District of Columbia
have EICs.
Talking
Points:
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This program truly
benefits people with very low incomes, especially those with children.
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The Earned Income Credit is the single most effective anti-poverty program
in the U.S. and has raised about 5 million individuals out of poverty
nationwide, over half of them children.
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Funds go to families very efficiently because
administration does not require state agencies or employees. The Earned
Income Credit
uses
the same
mechanisms of payroll tax
collection already in effect for people of all income levels.
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The high cost of
living in
Massachusetts supports the EIC
increase on behalf of working people who do not make enough to buy adequate
food, clothing, housing and other necessities. (For example, it is estimated
that a family needs to make $24 an hour to rent a two-bedroom apartment at
$1200 per month, a hard to find option in much of the state.)
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The EIC encourages
work with its advantages to society of bringing people into the mainstream
of public life and providing opportunities for new skills and advancement.
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The EIC provides an
economic stimulus where participants live, since the extra income becomes
part of each paycheck that is usually spent quickly and the federal dollars
transferred far exceed the state contribution.
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Estimates are that
about 70,000 eligible workers in
Massachusetts (20% of the
workforce) have not applied for the EIC.
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The EIC helps
mitigate the regressive nature of the flat
Massachusetts income tax.
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The additional income provided by
the EIC is modest, but extremely important to those at the bottom earnings
levels. (For example, someone working full time at the minimum wage makes
about $15,000 per year in
Massachusetts. The federal EIC currently adds
$2713 to the family’s annual income if there is one qualifying child and
$4480 for two or more children. The state EIC adds $407 per year for one
child and $672 for two or more children. HB 3036 would double the current
state EIC.
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