The voices of Tax Policy Center's researchers and staff
Redesign the EITC to help more low-income workers. TPC’s Elaine Maag thinks that’s the way to go. She explains in her new paper: “A worker credit based on individual earnings, and not contingent on having children at home, could provide substantial benefits to all low-income workers, ease administration for the IRS, and encourage work for childless individuals and secondary earners. A broadly available $1,500 credit would cost around $870 billion over 10 years.”
Bay State Senate D’s would freeze the state’s income tax rate and increase its EITC. The Massachusetts Senate began debating the state’s $38 billion budget this week. Democratic leaders want to expand the state’s earned income tax credit over the next three years from 15 percent to 22.5 percent of the federal EITC. By 2017, it would boost the subsidy for the average low-wage earner by about $470 a year. The expansion’s $145 million price tag would be offset by freezing the income tax rate at 5.15 percent, instead of allowing it to drop to 5 percent over the next few years as scheduled.
Oregon drivers can sign up to pay a per-mile tax starting July 1. The first-in-the-nation statewide program will raise money for roads and bridges, as gasoline tax revenue continues to decline. Up to 5,000 volunteers can sign up to drive with devices that collect mileage data. They’ll pay 1.5 cents for each mile traveled on Oregon public roads. They’ll still pay the state’s gasoline tax when they fill up, but get a credit on their monthly pay-per-mile bill to make up for it.
In California, an embarrassment of riches? Tax revenues are surging—coming in at $5.6 billion higher than predicted last year—thanks in large part to the tech sector’s performance. What will the state do with the money? Democratic Governor Jerry Brown isn’t keen on raising spending too dramatically. Economic expansions in the state last about five years on average, and California is in year six. Are tax cuts on the horizon?
A Louisiana state senator wants to help Governor Jindal keep his no-tax promise. The state has a $1.6 billion budget gap, but presidential hopeful Jindal signed the Americans for Tax Reform “no-tax” pledge. The Louisiana House passed 11 tax bills last week that raise revenue, including $417 million targeted for higher education. The legislature must pass an equal amount in tax cuts to avoid a gubernatorial veto. One senator’s solution: Establish a new state higher education tax credit that is supposed to offset a student fee. Of course, the proposed bill never requires that residents actually pay the fee. The credit would serve as a pass-through for the House’s $417 million revenue boost for higher education. No-tax pledge: Kept. Ta-dah!
Interested in subscribing to the Daily Deduction, the Urban-Brookings Tax Policy Center summary of the day’s tax news? Sign-up here to get the Daily Deduction delivered to your inbox every morning. If you’d like to tell us about a new research paper or have any comments about our feature, write us at firstname.lastname@example.org.
Posts and comments are solely the opinion of the author and not that of the Tax Policy Center, Urban Institute, or Brookings Institution.