OKPOLICY.ORG
OKLAHOMA CITY – Legislation that would restore the earned income tax credit to its previous levels will be filed soon by newly-elected state Rep. Collin Walke.
Senate Bill 1604 approved last year by the Legislature and signed by Governor Fallin cut the tax credit’s benefit for low-income working families by nearly 75 percent. The bill, one of several measures intended to help close a $1.3 billion state budget gap, will increase state income tax collections by an estimated $29 million.
SB 1604 “penalizes some of Oklahoma’s neediest citizens by withholding funds they desperately need to buy milk and food for their families,” said Walke, D-Oklahoma City. “Balancing the state budget on the backs of our state’s poorest citizens is unconscionable.”
Oklahoma’s earned income tax credit is equal to 5 percent of the federal EITC. The maximum tax credit for a family with two children has been $277; for a family with three children, $312.
The credit is designed to encourage work by supplementing earned income from lower-wage jobs. “Only working parents and a few working singles can claim the credit,” Walke emphasized.
Furthermore, EITC recipients pay taxes, he pointed out. They pay income taxes and sales taxes, and many pay property taxes, too. The people who qualify for the earned income tax credit pay a higher percentage of their annual income in taxes than do the wealthy, Walke added.
The state’s EITC was created in 2000 during the administration of Republican Gov. Frank Keating, and had enjoyed bipartisan support as a means of keeping working families out of poverty.
The Oklahoma EITC previously was “refundable,” which meant that families received the full value of the tax credit even if it exceeded their income-tax liability. “Refundability is critical to the success of the EITC because it allows the credit to reward work and support families even if workers have small state income-tax bills,” the Oklahoma Policy Institute reported.
Senate Bill 1604 eliminated the refundability feature, effective with the 2016 tax year. That will reduce or eliminate the benefit for nearly two-thirds of the 334,000 Oklahoma families who claim the tax credit.
Because of SB 1604, a single mother with two children and working full-time at $10 an hour will experience a tax increase of $231, and a married couple with three children and earning $20,800 a year will realize a tax hike of $313, the Oklahoma Policy Institute calculated. The average loss will be $91 per family, according to an analysis by the Institute on Taxation and Economic Policy.
In Walke’s House District 87 (which extends from Northwest Expressway south to NW 16th Street, between Penn and MacArthur), scrapping the refundability feature of the EITC adversely affected more than 2,450 working families. The estimated total loss was $345,000 – an average of $140.81 per family – ledgers reflect.
http://www.tahlequahdailypress.com/news/state_news/earned-income-tax-credit-legislation-to-be-filed-by-nw/article_71858c7a-bd84-11e6-9c1d-17ae23afa4a6.html
