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Senate tax proposal criticized for offering “only a few dozen dollars” to low-income workers instead of expanding EIC

Sunday, Apr 3, 2022 - Posted by Rich Miller

* Background is here if you need it. I’m told that Senate President Don Harmon “fully supports” the tax cut plan unveiled on Friday. Here’s Amber Wilson from Economic Security for Illinois on behalf of the Coalition to Make EIC Work…

“We were disappointed that Senate leaders offered a nearly $2 billion dollar tax relief proposal that leaves behind low-income families and immigrant workers. We are glad to see that a much-needed expansion to the Earned Income Credit is on the table in the budgeting process, however, we know what was offered does not meet the needs of our communities at this critical moment. The average low-income worker would see only a few dozen dollars back, whereas the proposal our coalition supports would have offered hundreds more in a refund check at tax time.

The Coalition finds it particularly troubling that the Senate did not expand the full credit to low-income workers who are currently ineligible for the EIC. While the proposal would include immigrants who file taxes with an ITIN in the Earned Income Credit, it would subjugate them to an entirely different tax scheme that prevents the opportunity of receiving a refund check. ITIN filers pay the same taxes as those who have earned full citizenship and they should be offered the same chance at relief. Childless adults who are ineligible for the credit because of their age are completely absent from the Senate proposal.

During their announcement, we were heartened to hear Senate leaders tout the Earned Income Credit as “critical” and the “most effective anti-poverty tool we have,” and we encourage them, and their colleagues in both legislative chambers and the Governor’s Office, to take advantage of the popular and effective Earned Income Credit by offering it to excluded workers and increasing the value for all who qualify.”

The coalition includes groups like AARP Illinois, Chicago Community Trust, Chicago Urban League, Illinois Coalition for Immigrant and Refugee Rights, Illinois Nurses Association, Illinois Public Interest Research Group, Latino Policy Forum, Metropolitan Planning Council, Service Employees International Union - Healthcare, SEIU locals 1, and 73, Shriver Center on Poverty Law, United Food & Commercial Workers - Local 881, United Way of Illinois, Voices for Illinois Children and Women Employed.

* Ralph Martire has more about the proposal

There is, however, one more fiscally responsible thing the state can do that will really help families across Illinois: enact the initiatives detailed in House Bill 4920 and Senate Bill 3774.

First, the legislation would enhance the state’s existing Earned Income Credit – by increasing its dollar value as well as expanding eligibility for claiming it. Illinois’ EIC, which is based on the EITC given at the federal level, is a “refundable” tax credit targeted to low-income workers. This effectively puts money in the pockets of folks who need it most. And we know it works. When benefits provided under the federal EITC were increased as part of the American Rescue Plan Act, almost 1.5 million Illinoisans benefited.

The proposed Illinois legislation would also create a new refundable Child Tax Credit to help low-to-no-income families with dependent children. Again, we know this will make a meaningful difference if it becomes law. When the federal Child Tax Credit was increased under ARPA, it benefited nearly 90 percent of Illinois children who are under age 17. […]

Expanding the state EIC and creating a new Child Tax Credit as legislators have proposed, would give up to 4.8 million Illinoisans – or about 40 percent of the state’s population – at least $600 back in tax refunds, make the state’s tax policy fairer, reduce child poverty, and support lower-wage workers. Better yet, those refunds will get pumped right back into local economies across Illinois. In fact, we estimate the state’s private sector economy will realize a stimulus that could top $1 billion if these credits are fully implemented as proposed – far more than the estimated upfront cost of about $415 million.

* More on the EIC component…

* Illinois Senate Democrats introduce $1.8 billion tax relief plan: The legislation also includes an expansion of the state’s earned income tax credit for young adults, anyone 65 and older, and undocumented immigrants or others with an individual taxpayer identification number. Sen. Omar Aquino also pushed to have the state’s EIC increase from 18% to 19% for taxable years after January 1, 2023. Aquino is one of several lawmakers fighting for more low-income Illinoisans to get access to the earned income tax credit. While that plan was included in this legislation, the creation of a child tax credit was left out, although Aquino explained that families could still have extra money coming in through the one-time refunds. “This is a proposal that we want to get out there so that we can get to the table and talk to the governor and his folks and also there’s another side of the building as well that has to be a part of this conversation,” Aquino said. “But the Senate Democrats are putting our proposal on the table and wanting to support families throughout the entire state.”

* Crime and budget are top of mind for Illinois lawmakers as session wraps up Friday: A part of the Senate proposal sponsored by Aquino includes a smaller increase in the credit but not the expansion of eligibility that advocates are seeking. The issue is still in play, according to sources familiar with negotiations, who asked not to be identified because they were not authorized to discuss closed-door talks. But a final agreement hinges on finding a consensus that doesn’t create a budget hole in future years, sources said.

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7 Comments
  1. - Who else - Sunday, Apr 3, 22 @ 2:46 pm:

    Re: the advocates’ statement on EIC– I couldn’t have said it better myself. And I’ll add that the idea that a married couple with no kids making $500,000/year needs one-time $200 check mailed to their home is ridiculous.


  2. - Google Is Your Friend - Sunday, Apr 3, 22 @ 3:32 pm:

    - Who else - Sunday, Apr 3, 22 @ 2:46 pm:

    The difference in working for ‘voters’ versus ‘everyone’


  3. - Facts Matter - Sunday, Apr 3, 22 @ 3:57 pm:

    Interesting to see that Mr. Martire is embracing supply side economics - cut taxes and the stimulus effect will more than offset the fiscal impact of the cut . . . .


  4. - Oswego Willy - Sunday, Apr 3, 22 @ 4:01 pm:

    Pretty easy for the governor to sit on the sidelines here, if he chooses to do so.

    It might even be a good choice for the governor to do so, given the coalition’s makeup.


  5. - Candy Dogood - Sunday, Apr 3, 22 @ 6:02 pm:

    Sometimes the “every little bit helps” attitude can feel a lot like a poke in the eye.


  6. - Soccermom - Monday, Apr 4, 22 @ 8:15 am:

    What Ralph Martire said. Don, I don’t need the $200. I need a thriving state economy that includes everybody as we move toward prosperity.


  7. - JJJJJJJJJJ - Monday, Apr 4, 22 @ 12:53 pm:

    @Facts Matter

    The key is the % of the spending power reinvested into the economy. Increasing the spending power of the poor and low income individuals is much more likely to result in the type of economic activity that is most valuable.

    Tax cuts for the wealthy, which is usually how supply-side is used, results in their spending power going towards investments or luxury items, which have less of a societal benefit.

    Plus obviously the immediate impact of bringing people out of poverty exists here and does not for other uses of supply-side thinking.


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