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Expanded Earned Income Tax Credit Could Affect Hundreds Of Thousands In Ohio

Sherrod Brown

President Obama released his budget proposal for fiscal year 2015 Tuesday, and among the many reforms, cuts and expansions, he’s calling for an expansion of the Earned Income Tax Credit (EITC), a program benefiting low-income Americans.

The EITC is an anti-poverty credit that was available to a parent of three making less than $46,227 a year in tax year 2013.The credit’s most generous benefits go to working parents, but there are also refunds available for some individuals with an income around $14,000 or less. The president’s budget would raise those income limits to include more single working adults, and give back more money.

The EITC was originally passed by Republicans in 1975 and signed into law by Gerald Ford, and it has generally enjoyed bipartisan support. The EITC was expanded in 2009 in response to the Recession, and the expansion lasts until 2017; the president’s proposal would lock in the broader version of the program in place today.

“Reagan called it the best anti-poverty program in the entire government,” said Ohio Democratic U.S. Senator Sherrod Brown, speaking to Ohio Public Radio. “In a society when a lot people are struggling, we should be rewarding work and rewarding people who are taking responsibility for their lives.”

The Center on Budget and Policy Priorities estimates that in 2012, the EITC lifted 6.5 million Americans out of poverty.

About 950,000 Ohioans got the Earned Income Tax Credit for 2012, and the average Ohio credit was $2,307. A White House report on the president’s proposal estimates about 515,000 more Ohio residents would benefit either from additional tax rebates or from becoming newly eligible for the credit; single individuals who qualify could see their credit amount double.

“For those who are serious about not just talking the talk, but walking the walk on reducing poverty and helping low-income working families, they should support the president’s initiative,” said presidential advisor Gene Sperling in a Tuesday press conference.

Earned income tax credits are widely viewed as fighting poverty and rewarding work, but the chances of bipartisan support are unclear. House Republicans recently put out a tax reform proposal that would eliminate the credit and replace it with a smaller payroll tax cut.

Ohio Senator Rob Portman criticized the president’s budget in a release Tuesday afternoon: “As the incredibly weak economic recovery has shown us, you can’t tax, spend, and borrow your way to prosperity.  It’s unfortunate that the President’s budget proposal squanders an opportunity to enact pro-growth policies or reform our important but unsustainable entitlements. Instead, he proposes more of the same failed policies.”

A representative for Portman wrote WYSO to say that Portman favors the EITC: "Senator Portman supports the EITC because it encourages work, unlike many other anti-poverty programs. It's also a much more effective way to help low-income working families than raising the minimum wage," wrote Christyn Keyes from Portman's office.

Ohio legislators recently made Ohio one of 25 states to offer a state-level Earned Income Tax Credit; in Ohio it’s valued at 5 percent of the whatever the federal credit is, although the credit cannot be issued as a tax refund, which means those who don’t owe any state income tax can’t get paid out for the credit.

As a result of the limitations, just about half of Ohio residents who receive the federal EITC also receive a state credit; that has led groups including Policy Matters Ohio to call for an expansion of the state program as well. It’s not clear how many Ohioans could see that state-level credit change if the EITC were to be expanded federally.

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