Pro-work tax credits give a boost to thousands of veteran and military households in Wisconsin, but nearly half of those families will lose part or all of their tax credits unless Congress takes action.
Key provisions of the Earned Income Tax Credit (EITC) and the Child Tax Credit (CTC), both of which help families with low incomes make ends meet, are set to expire at the end of 2017. These federal credits encourage work, help children do better in school, improve the health of children and families, and strengthen the future workforce.
In Wisconsin, hundreds of thousands of households – including 36,000 veteran and military households – benefit from the EITC or the part of the CTC that benefits families with low incomes. However, 17,000 of the veteran and military families that benefit will lose part or all of their tax credits if Congress doesn’t act to protect improvements to those credits. Read more
Congress has a chance this fall to save key provisions of the federal Earned Income Tax Credit (EITC) and the Child Tax Credit (CTC), two proven pro-work strategies that help working families make ends meet and provide the basics for their children.
If Congress does not act, 158,000 Wisconsin families with 301,000 children will lose some or all of their working-family tax credits, according to a new analysis by the Wisconsin Budget Project.
There is an effort underway in Congress to make several temporary corporate tax provisions permanent, and the debate is expected to come to a head this fall. Some federal lawmakers have advocated for letting these corporate provisions leap-frog over tax credits for working families instead of putting top priority this fall on saving key provisions of the federal EITC and CTC. Something similar happened during the last major tax debate, when these EITC and CTC provisions were only extended through 2017 but estate tax changes for wealthy families were made permanent. Read more
Paul Ryan has a released a new poverty plan that advocates consolidating federal safety net programs and turning the money over to the states. It’s always worth taking a look at changes that could make anti-poverty program more effective, but Ryan’s approach would decrease opportunity for individuals living in poverty, not increase it.
Ryan frames his new proposal as aimed at giving low-income people the tools they need to make ends meet and lift themselves out of poverty. According to his proposal, Expanding Opportunity in America:
“A key tenet of the American Dream is that where you start off shouldn’t determine where you end up. If you work hard and play by the rules, you should get ahead. But the fact is, far too many people are stuck on the lower rungs…There are many factors beyond public policy that affect upward mobility. But public policy is still a factor, and government has a role to play in providing a safety net and expanding opportunity for all.”
Ryan believes that a fundamental redesign of how federal anti-poverty programs deliver services can help expand opportunity across the board. Read more
The FY 2015 budget proposal unveiled by the President this week addresses an issue that many politicians, researchers and commentators across the political spectrum have recently been talking about – providing assistance to low-income working adults who don’t have dependent children. We were very pleased to see the part of his budget that would help that long-overlooked population by making more “childless” workers eligible for the federal Earned Income Tax Credit (EITC) and increasing the small credit for those who are already eligible.
The EITC encourages and rewards work, offsets federal payroll and income taxes, and boosts living standards. As the Center on Budget and Policy Priorities (CBPP) points out: “Next to Social Security, the EITC combined with the refundable portion of the CTC [child tax credit] constitutes the nation’s most powerful anti-poverty program.” However, the federal EITC currently provides little or no benefit for adults who don’t have dependent children, and the Wisconsin EITC doesn’t apply to that population. Read more
Important tax credit eligibility information for Wisconsin families.
About 22,000 military families in Wisconsin receive the federal Earned Income Tax Credit (EITC) or the low-income component of the Child Tax Credit (CTC), according to a new report from the Washington, DC-based Center on Budget and Policy Priorities.
Nationally, roughly 1.5 million military families, which include about 3 million children under age 18, received one or both of the credits. The credits make a major difference to their economic security:
- The EITC and CTC together keep more than 140,000 military families — with nearly 300,000 children and 600,000 total family members — from falling below the poverty line, based on the federal government’s Supplemental Poverty Measure, which counts income from tax credits.
- These credits reduce the severity of poverty for about another 800,000 members of military families.
- The credits also help working families with incomes modestly above the poverty line who still struggle with basic expenses like housing, school clothes, car repairs, and groceries.
Congress faces a choice.
It can extend a tax break for a tiny number of wealthy estates. Or — for about the same amount of money — Congress can continue improvements to two tax credits that encourage work and help millions of people pull themselves out of poverty.
In Wisconsin, the tax break for wealthy estates would benefit only 40 estates a year, according to a new report. In contrast, the improvements to the tax credits would give a boost to 155,000 low- and moderate-income working families in Wisconsin.
3,800 to 1 = Ratio of WI Families Hurt by Tax Credit Changes, Compared to the Estates Benefiting from Estate Tax Cut
In the next two or three months, Congress will have to choose between two starkly different tax options that have divided the U.S. House and the Senate. It’s a choice that has been overshadowed by other parts of the debate over expiring tax provisions, but it will be a telling vote on legislative priorities.
Lawmakers can extend a tax break for a tiny number of wealthy estates. Or – for about the same amount of money – Congress can continue improvements to two tax credits that encourage work and help millions of people pull themselves out of poverty.
In Wisconsin, the tax break for wealthy estates would benefit only 40 estates a year, according to a new report. In contrast, the improvements to the tax credits would give a boost to 155,000 low- and moderate-income working families in Wisconsin. Read more
If you don’t read the WCCF blog, let me bring you up to date on what we know and don’t know about funding in the next biennial budget for the state’s Earned Income Tax Credit (EITC).
The Dept. of Children and Families’ budget request for the 2013-15 biennium recommends a large reduction in one of the funding sources for the EITC. Beginning in fiscal year 2014-15, DCF proposes cutting $37 million from the portion of the credit’s funding that comes from the block grant known as Temporary Assistance for Needy Families (TANF). But since the rest of EITC funding is the responsibility of the Dept. of Revenue, the DCF recommendation doesn’t tell us whether the intent is to reduce total EITC funding or only to shift the funding sources.
In a post on the WCCF Blog on Monday, I explain why a funding shift could be a good thing for important programs for low-income kids, such as the Wisconsin Shares child care subsidy program. Read more
Working Class Families Would Pay More in Taxes
Compared to President Obama’s tax plan, the tax package supported by Congressional Republicans would give big tax breaks to the top earners in Wisconsin, while raising taxes paid by working class families in the state.
The President’s and the GOP plan differ in two main respects: First, President Obama’s plan continues the Bush tax cuts for income up to $250,000, while the GOP plan continues the tax cuts for all income levels. Under the president’s plan, high earners would still receive tax breaks on the first $250,000 of their income.
Second, the president’s plan also continues improvements in tax credits for working-class and middle-class families. The GOP plan does not continue these improvements.
On average, Wisconsin taxpayers earning less than $250,000 would pay an average of $50 more in taxes under the GOP plan than the Obama plan, according to a report released by Americans for Tax Fairness. Read more