House Tax Committee discussing proposal for reductions to Kansas Earned Income Tax Credit
Topeka ? A proposal to reduce the Kansas Earned Income Tax Credit would throw thousands of working families into poverty, religious and social service, advocates said Tuesday.
“This bill takes us backwards,” said Gary Brunk, an official with Kansas Action for Children.
House Bill 2347 would reduce the amount of the tax credit from the current 18 percent of the federal Earned Income Tax Credit to 5 percent when fully phased in.
It would also make the credit nonrefundable, meaning that if a family’s tax credit was higher than their tax liability, they would have their liability paid off but would no longer get a check for the difference. Currently, the full credit is refundable as a way to offset the regressive nature of sales taxes paid by low-income families.
The EITC is touted by advocates as one of the most effective anti-poverty programs going.
But state Rep. Terry Calloway, R-Pittsburg, said he proposed the bill because Kansas’ EITC was more generous than most states that offer it.
“It looked like we were out of proportion to the region and out of proportion to the national average,” Calloway told the House Tax Committee.
Testimony during the committee meeting indicated the state could save $56 million by reducing the EITC. But officials from the Kansas Department of Social and Rehabilitation Services said $29 million of that would have to go back to the agency to maintain required funding levels to attract federal dollars for programs that help the poor.
Jan Lewis, president and chief executive officer of Catholic Charities of Northeast Kansas, said it didn’t make sense to reduce a tax credit for low-income families when the state would be forced to use the savings to fund programs for many of those same families.
Rep. Mario Goico, R-Wichita, agreed, saying it was better for the families to get the money directly through the tax credit instead of making them “more dependent on the state.”
Advocates estimated that more than 90 percent of Kansas’ EITC dollars go to families with children, and the average credit is about $360. Without the credit, 6,500 Kansas families would have their income drop below the poverty line. An additional 128,000 Kansans already in poverty, including more than 50,000 children, would be pushed deeper into poverty.
Tax Committee Chairman Richard Carlson, R-St. Marys, said he didn’t know yet whether the committee would work on the bill.