SUSAN SCOTT | Posted: Monday, February 13, 2006 6:00 pm
At the Lincoln YWCA, we work directly with low-income parents and see the worry etched in their faces as they juggle the costs of food and school clothes, heating fuel and day care, always worried about the medical bills that will come if one of their kids gets sick. For these families, every penny counts.
We are proud to do our part in the community by providing child-care and preschool classes for children in low-income families, interview coaching and clothing for women who are getting back on their feet, education and parenting training for young pregnant and parenting women, and job training for those who are trying to make a new start. But more is needed.
In Gov. Dave Heineman’s recent State of the State address, he focused on tax relief — proposing to reduce income, sales and property taxes by more than $421 million over the next three years — as a key to growing our economy.
While these measures can boost the economy, the majority of his proposed tax relief will not go to those most in need. To reach those just barely getting by, we must build on the success of the Earned Income Tax Credit, or EITC, one of the most effective federal tools for lifting low-income working families out of poverty.
More than 100,000 low-income households in Nebraska received the federal EITC last year, bringing more than $170 million back to our state. Recipients use these dollars to buy everyday necessities and pay off debts. The credit encourages work and helps recipients stay off welfare.
It’s time to expand the benefits of the federal EITC by passing a state version of the credit in Nebraska. Such a state credit would relieve the state tax burden of many low-income working families here.
Several state legislators, including Sen. David Landis, are calling for a state EITC. Their bill would provide to eligible individuals and families a state tax refund equaling 20 percent of the amount they receive from the federal EITC. Such a measure would bring an additional $34 million back to the state. I encourage Gov. Heineman to add this important initiative to his tax relief agenda.
At the YWCA, we spread the word about the federal EITC through posters and outreach materials, and encourage Nebraska’s employers and nonprofit groups to do the same. Families with two or more children earning between $9,000 and $15,000 are the largest benefactors of this program, with a maximum refund of $4,400. Refunds average $1,200. Families earning up to $37,000 can receive a small tax credit.
In addition, low-income families can receive assistance in filing their taxes and determining if they are eligible for the EITC at numerous Volunteer Income Tax Assistance sites organized by the Community Action of Nebraska.
The federal EITC enjoys bipartisan support, having been created under President Ford and expanded under Presidents Reagan, George H.W. Bush and Clinton. President Reagan called the EITC, “the best anti-poverty, the best pro-family, the best job creation measure to come out of Congress.” That is equally true of state EITCs, which have been enacted in 18 states and the District of Columbia.
By next year’s tax season, I hope to see a Nebraska state EITC in effect, which will help ease a few of those worry lines on the faces of our low-income working parents while strengthening our economy at the same time.
Susan Scott is executive director of the Lincoln YWCA.