Weekly News Round-Up: December 9, 2011
December 9th, 2011
Here are some highlights from this week’s news on family tax credit issues. Remember – you can also track news coverage throughout the week by visiting our , where you can filter news by a specific credit and/or state.
- Oklahoma Gov. Mary Fallin is reviewing a report from a task force she put together earlier this year to develop a 10-year program to reduce and ultimately eliminate the state’s personal income tax before the start of next year’s legislative session. The plan recommends eliminating several tax credits that benefit low- and middle-income families, including the state’s Earned Income Tax Credit, Child and Dependent Care Credit, Child Tax Credit, and a circuit breaker property tax credit. (The Oklahoman, OK Policy Blog)
- In an attempt to address the state’s $1.5 to $2 billion revenue shortfall, Washington Gov. Chris Gregoire has proposed an all-cuts budget that would eliminate $2 billion in spending, in conjunction with a temporary half-cent sales tax to raise the $500 million in revenues needed to fully fund Washington’s Working Families Tax Rebate (modeled after the federal EITC), along with other essential programs and services. (Washington State Budget and Policy Center, PubliCola)
- Speaker Michael Madigan called the Illinois House back into a special session next week, saying that an agreement has been reached on a tax package comprised of several tax breaks that would benefit both businesses and individuals. The General Assembly adjourned last week after disagreement over an increase to the state Earned Income Tax Credit prevented the tax package passed by the Senate from securing enough votes to pass the House. The latest House proposal is very similar to the plan passed by the Senate, but would break up the original package into two separate bills, one of which would provide tax relief to working families through an expansion of the state EITC from 5 percent to 10 percent of the federal credit over a 10-year period. Illinois Gov. Pat Quinn and Chicago Mayor Rahm Emanuel have both expressed their support for an EITC increase. (Chicago Tribune, WJBD, Chicago Business 1, 2, WBEZ Chicago 1, 2, CBS Chicago, Chicago Tribune, Illinois Issues)
- Last December, Congress replaced the two-year-old Making Work Pay tax credit with this year’s payroll tax cut. That change, according to Tax Policy Center Senior Fellow Roberton Williams, cut taxes for higher-income workers, raised taxes for some low-wage workers, and nearly doubled the amount of lost tax revenue. And it most likely provided less bang-for-the-buck economic stimulus than the credit it replaced. Williams argues that instead of extending the payroll tax cut, Congress should revert to the original Making Work Pay credit, giving a break to low- and middle-income families who are more likely to spend the extra money. (TaxVox)
- On Thursday, the U.S. Senate rejected dueling partisan proposals to cut federal payroll taxes by for 160 million Americans, while House Republicans moved ahead with a new, more conservative plan that would link the tax issue to other GOP priorities. Republicans reportedly plan to offset the cost of the payroll tax cut with measures that would require families receiving the Earned Income Tax Credit or Child Tax Credit to prove their children’s citizenship by submitting their Social Security numbers. With an end-of-year deadline looming, if Congress does not resolve the issue by the end of the month, the payroll tax rate paid by workers will revert next year to 6.2 percent, instead of the 4.2 percent that has been in place for the past year. (CNN, Talking Points Memo, Washington Post 1, 2)
- New York Gov. Andrew Cuomo has reached a deal with state lawmakers on a tax-overhaul plan he says can break the political gridlock and grow the economy. The plan would raise taxes on wealthy New Yorkers and generate an estimated $2 billion a year. James Parrott, deputy director and chief economist at the Fiscal Policy Institute, says the tax plan takes a stab at creating more progressive tax brackets, but an expanded property tax circuit breaker would have provided greater tax relief for low-income residents while generating more than twice the revenue for the state. (Public News Service)
- John Spiegelhoff, a staff representative of the American Federation of State, County and Municipal Employees’ Wisconsin Council 40, addresses why he is working to recall state Sen. Pam Galloway (R-Wausau). His reasons include that she and her colleagues cut the state’s Homestead Credit, a property tax circuit breaker, and the state’s Earned Income Tax Credit. (Wausau Daily Herald)
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