WASHINGTON Utah's lower-income workers and families would benefit from expanded earned income tax credit policy proposals offered in the latest study from the Brookings Institution.
While it would be up to Congress to ultimately pass any new rules for the tax credit, a study by the Metro Policy Program at Brookings offered several ideas on how to expand the tax credit to help 8.4 million taxpayers in the nation's top 100 metropolitan areas including Salt Lake City.
"The EITC is widely regarded as a success story for working low-income Americans. It encourages work, helps families make ends meet and strengthens local communities," said Alan Berube of Brookings, who is one of the authors of the report, "Metro Raise: Boosting the Earned Income Tax Credit to Help Metropolitan Workers and Families." "However, the EITC could do much more for certain groups of low-wage workers. Making these expansions would help close the growing gap between wages and costs of living, which is most pronounced in America's major metropolitan areas."
Salt Lake City is one of the top 10 areas that would benefit from Berube's proposals to allow couples to exclude one-half of a second earner's income to claim the credit and create a third tier for families with three or more children.
"Looking at these proposals, someone had Utah on their mind," said Karen Crompton, executive director of Voice for Utah's Children on a panel discussing the report in Washington Friday.
Crompton said she was there to confirm the rumor that Utah has larger families than other states and the highest number of parents in the work force. She said a lot of families would benefit from the proposed changes, even those perceived as being middle class that are actually lower income.
Berube said the current rules can be a "disincentive to marriage" for low-income couples. Right now, a married couple with two children filing jointly and earning $30,000 qualifies for an EITC of $2,453 in 2008 but as two separate filers earning $15,000 each, the parent with two children qualifies for a credit of $4,824, or nearly double what the married couple receives.
Eliminating the "marriage penalty" and allowing married couples to not include half of a spouse's income to calculate the EITC would help about 1.8 million filers.
An additional tier for more children would help 2.9 million filers in the 100 largest metro areas, Berube said. He pointed out that families with three or more children have more housing, food and child-care expenses than those with one or two children, yet there is no additional tax credit for them.
The report also recommends increasing the credit for workers with no children, highlighting that those at the poverty line get taxed about $949 deeper into poverty with federal income and payroll taxes.
Crompton said her organization would keep working in Utah to for local changes to the credit but that "Congress can make a bigger difference" by implementing the changes. Specific legislation on these proposals does not exist yet.Berube said it is always a matter of "competing priorities" among lawmakers, and part of the point of the report is to illustrate how the changes could improve things on a local level.