When Scott Walker announced his new $100-a-child tax credit, the plan was to have it go to any parent, regardless of income level or if they owed taxes or not. But now that the public and the GOP-controlled Legislature clearly aren’t head-over-heels for it, Walker says he’s willing to pare the credit back.
Asked why he is proposing work requirements for beneficiaries of public assistance, but proposing cash payments to families with no strings attached in the form of a refundable income tax credit, Walker said he would be "open if the Legislature so deemed to tie it into taxable liability."Of course, the families with no tax liability tend to be low-income, which means they would be the ones that miss out if Walker and the WisGOP Legislature chose to limit the cost by making it refundable. Cute trick, eh?
Under Wisconsin tax law, families with no tax liability would be eligible for the child tax credit if it were refundable, meaning the state would pay it out to tax filers as part of their annual tax refund. Only two other state states, New York and Colorado, offer a refundable child tax credit. The federal child tax credit is partially refundable.
The Wisconsin State Journal's Matt DeFour also notes that Walker has cut back on the ability for low-income workers to take advantage of another tax credit over the last 7 years, and that this new Child Tax Credit would cost more than that writeoff if all Wisconsin parents were included.
The state already offers an earned income tax credit (EITC), which Walker scaled back in a previous budget. Only families who work and make up to a certain amount of income may receive that credit, which means it primarily benefits low-income workers.Let me add that the cost for the next fiscal year of Walker’s proposal would actually be $244 million, because of the stunt Walker wants to pull where checks of $100 would go out to parents around Labor Day 2018, and then parents can write it off AGAIN when they file their 2018 taxes in early 2019.
About 253,000 tax filers claimed the EITC in 2015, at a cost of about $100 million to the state, according to the Department of Revenue. The EITC phases out for a two-parent household with two children at about $50,000.
The proposed new child tax credit could cost the state $122 million a year in tax revenue if all 670,000 families with children under 18 qualified. Walker's proposal doesn't include an income-based threshold, as the five state and federal child tax credits do.
Meanwhile, the state's roads continue to crumble and colleges like UW Oshkosh are considering more layoffs and budget cuts due to a drop in enrollment and a lack of funding from the state. Maybe there are bigger priorities for the state that need to be dealt with instead of giving away another one-sided tax cut that will starve services more. Just a thought.