Tax Law

State Net Capitol Journal – August 10, 2015; States Embrace Earned Income Tax Credit

Budget & Taxes

States Embrace Earned Income Tax Credit

As states continue to recover from the Great Recession, several are embracing a tax credit to help bring working families along. This year five states, including California and Massachusetts, where a Democrat and a Republican hold the top office, respectively, have enacted or enhanced Earned Income Tax Credits, which lower the state income tax bills of moderate- and low-income workers.

 “I have always liked the Earned Income Tax Credit because it doesn’t have any particular bureaucracy or complexity,” said California Gov. Jerry Brown (D). “It’s just a straight deliverance of funding to people who are working very hard and are earning very little money.”

Massachusetts Gov. Charlie Baker (R), likewise, said, “You can debate all day how other supports work, but this one’s pretty clear: If you work a certain number of hours, and you qualify, you get the credit. I think that’s a good thing and I think we should do more of it.”

The federal EITC was adopted in 1975, and 26 states now have their own versions of the credit. Michael Leachman, director of state fiscal research at the progressive Center on Budget and Policy Priorities (CBPP), said the EITC has “enjoyed bipartisan support” for years. Liberals see it as a way to help narrow the income inequality gap for the poor, and conservatives see it as a reward for work.

 “It’s been thoroughly studied and it really does help low-income families to make work pay,” said Leachman. (STATELINE.ORG, STATE HOUSE NEWS SERVICE)

States Seek To Rein In Rising College Tuition Rates

During the Great Recession college tuition rates rose steeply to replace state education funding lost to budget cuts. But with student loan debt nearing $1 trillion nationwide and families of every income level worried about the rising cost of college, state lawmakers are trying to relieve some of the pressure.

Minnesota passed legislation this session freezing tuition at two-year colleges in the state this fall and cutting tuition next year. Ohio’s new two-year budget freezes tuition at that state’s public colleges and universities. And Wisconsin has frozen in-state tuition at its 26 university campuses.

But a long-term solution to rising tuition rates will ultimately require a change in the behavior of American families, according to David Strauss, a principal at the Baltimore-based consulting firm Art & Science Group. Strauss said families are voicing concern about the high cost of college, but they’re not moving toward less expensive institutions with fewer amenities.

 “The marketplace hasn’t yet caught up with the rhetoric,” he said. (STATELINE.ORG)

Budgets In Brief - August 10 2015

NC Tentative On HB 943: The NORTH CAROLINA House tentatively approved a nearly $3 billion bipartisan bond proposal for roads and government infrastructure that would go before voters in the fall. Another vote was required in the House before HB 943 could move to the Senate (ASSOCIATED PRESS, FAYETTEVILLE REPORTER, LEXISNEXIS STATE NET). * PA Budget at Impasse: PENNSYLVANIA lawmakers are looking into borrowing to keep the government running as the state’s budget impasse drags into its second month. The state has been operating on reserves since the last fiscal year ended on June 30 (PATRIOT-NEWS [HARRISBURG]). * OH Jock Tax to be Appealed: Cleveland is appealing the OHIO Supreme Court’s ruling in April striking down its “jock tax” on visiting professional athletes to the U.S. Supreme Court. The city has asked the state Supreme Court to stay its ruling pending that appeal (CLEVELAND PLAIN DEALER).   OHIO Treasurer Josh Mandel’s (R) plan to expand the state’s online spending database,, to include local government expenditures will cost $2.7 million over the next two years. But Mandel said that’s “a fraction” of the $6 million his office has saved the state since he was elected treasurer four years ago (CLEVELAND PLAIN DEALER). * WI Budget Approved: With WISCONSIN Gov. Scott Walker’s (R) approval of a new two-year budget last month, the state has now forgone $550 million in federal money available to it under the Affordable Care Act. Unlike other Republican governors who have affirmed their opposition to Obamacare by refusing to expand Medicaid, Walker has opted instead to expand his state’s program by 145,000 people without accepting any federal money for doing so (MILWAUKEE JOURNAL SENTINEL). * KS Spending Cuts: The administration of KANSAS Gov. Sam Brownback (R) announced last month that it will make nearly $63 million in spending cuts and fund transfers to bolster the state’s cash reserves. The biggest single reduction, $17.7, will be to the State Children’s Health Insurance Program (LAWRENCE JOURNAL-WORLD).

- Compiled by KOREY CLARK

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