Legislation would expand earned income tax credit and create child tax credit

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Illinois state Rep. Carol Ammons, D-Urbana



With inflation running rampant, some are calling for a change to income taxes for low-income residents in Illinois.

Lawmakers and advocates say low-income families spend a larger share of their income meeting basic needs, which has become difficult as prices rise.  

Two bills in the Illinois statehouse would expand the Earned Income Credit (EIC) and create a Child Tax Credit (CTC), which sponsors say will give nearly 5 million Illinoisans more cash at tax time.  

“This has been proven to affect poverty,” Rep. Carol Ammons, D-Champaign, sponsor of HB4920, said. “This is an anti-poverty policy that we know works and gives people direct relief.”

Under the legislation, 1.2 more Illinoisans would be newly eligible for EIC, and 3.6 million existing EIC recipients would receive more financial support.  

According to a report from the bipartisan Center for Tax and Budget Accountability, spending on the EIC and CTC would create $1 billion in local and statewide economic benefits.

“It really is putting money back in worker’s pockets, so it is boosting their earnings so that they are able to spend that in the economy,” said Allison Flanagan, associate director of Budget and Policy for the CTBA. “You get sort of this duplicative effect. It is helping the household and those households are going and spending the money.”

The federal Build Back Better Act called for extending a temporary federal child tax credit for at least one more year, but the legislation has stalled.

Illinois currently does not have a CTC at the state level. Flanagan said that in addition to alleviating poverty and stimulating the economy, the refundability feature would create an effective, as well as administratively facile, way to make the tax burden fairer.

“This bill would cost only 1% of the state’s total general fund revenue, so it’s such a small drop in the bucket for such a large impact,” Flanagan said.

via AdVantageNews.com

March 17, 2022 at 09:24AM

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