State Stories: Strengthen the EITC, Strengthen Local Economies

Sean Noble

Sean Noble serves as NCTC's Director of Public Policy & Research

This week, NCTC was able to help our Illinois affiliate – the Center for Economic Progress – make an important plug for increasing that state’s Earned Income Tax Credit.

Illinois lawmakers are considering a package of tax-relief measures for businesses that have raised concerns about the effects of a state income tax increase approved last January. Governor Pat Quinn has insisted that any such package include a long-overdue boost in the Illinois EITC, which – set at 5 percent of the federal credit – now is tied for the nation’s second-smallest such state credit.

NCTC helped CEP prepare and deliver testimony to the Illinois House Revenue Committee on Wednesday, emphasizing that an EITC increase actually should lead any tax-relief talk – including discussion about how to help businesses and local economies.

In our remarks, we highlighted the fact that the tax credit bolsters the purchasing power of families who spend their money at neighborhood shops and stores. Those businesses, in turn, are gradually helped to avoid layoffs – and to rehire employees they’ve already had to let go.

Paying customers represent “the basis for job retention and job creation, alike,” we told legislators, noting a robust EITC helps strengthen families who – in turn – strengthen their surrounding communities in a variety of ways. In fact, a Brookings Institution study in 2006 found that every dollar a family realizes through the EITC translates into $1.58 worth of local economic activity.

NCTC is happy to provide this kind of technical assistance to members in states where tax credits for working families are facing similar opportunities – or threats of cuts.

On the table in Springfield is a proposal to triple the size of the Illinois EITC over the course of a couple years.  Lawmakers could decide on various tax-relief measures by the end of the month.

By Sean Noble, Director of Public Policy & Research

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About National Community Tax Coalition

National Community Tax Coalition (NCTC) is the nation's largest, most comprehensive membership organization for community-based organizations offering free tax and financial services to low-income working families.

Posted on November 17, 2011, in NCTC and tagged , , , , , . Bookmark the permalink. Leave a comment.

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