According to the Legislative Fiscal Bureau, this move will start with the 2018 tax year, and the main two changes will reduce taxes for eligible families by over $26 million a year when it is fully phased in.
Credit Percentage for Claimants with One Child. Modify the percentage used to calculate the EITC by increasing the percentage from 4% to 11% for claimants with one child, beginning in tax year 2018. This would increase the cost of the credit by an estimated $20,800,000 in 201819. The proposed credit percentage is the same percentage used for claimants with two children.What' also interesting is that state taxpayers won't pay for about half of this increased EITC, but instead the state will use $13 million in additional TANF block grant money from the Federal Government, with state money filling in the rest.
Credit Calculation for Claimants Who Become Married. Beginning in tax year 2018, authorize claimants who become married in a year to claim the greater of the credit calculated as a married claimant or the credit claimed in the prior year when the claimant was unmarried. In the succeeding two years, authorize the claimant to claim the greater of the credit calculated as a married claimant for that year or the credit claimed in the year prior to the year the claimant became married. The proposed change would increase the cost of the credit by an estimated $1,500,000 in 2018-19. Because the provision would first apply in tax year 2018 and extend for the initial three years of the claimant's marriage, the cost of the provision is estimated to increase to $3,500,000 in 2019-20 and $5,500,000 in 2020-21.
The Wisconsin Budget Project points out that expanding the EITC can be a win-win, where not only do low-income families a few extra dollars, but it also goes to a group of people more likely to spend that money. A wider EITC can also remove some barriers to working more hours.
Expanding Wisconsin’s EITC would give a much-deserved break to working parents with low and moderate incomes. The EITC lets working families keep more of what they earn to help meet basic needs and pay for things that allow them to keep working, such as child care and transportation. This tax credit offers working parents a hand up by encouraging and supporting work. It’s a modest investment that can make a big difference in the lives of families.While Walker may be doing good policy ahead of next year's election, let's not give him too much credit for this proposal. Much like with his newfound desire to fund public schools, the Budget Project notes that Walker is offsetting a 2011 cut the EITC, and basically admits he made a mistake to do so.
The EITC also boosts local communities and economies across the state. It puts more money in the pockets of low-wage workers, who then spend it at local businesses to pay for things like groceries and child care. Businesses like this tax credit because workers who can pay for basic necessities are more dependable employees when they can afford child care and reliable transportation.
We'll see if this plan to expand Wisconsin's EITC survives after new revenue numbers come out in a couple of weeks, or if it's even sped up to hit in the 2017 tax year instead of delaying it to 2018. I would think we could swap out Walker's stupid $1-a-week income tax cut (which costs $100 million a year) for helping low-income families this year.
Jake- Off topic but share worthy. Dig in! http://usafacts.orgReplyDelete
The back story. https://www.nytimes.com/2017/04/17/business/dealbook/steve-ballmer-serves-up-a-fascinating-data-trove.html?smid=fb-nytimes&smtyp=cur&_r=0ReplyDelete