Lawmakers Begin Pushing for State Earned Income Tax Credit

While lawmakers discuss ways to fix the state’s projected budget deficit, a related piece of legislation is beginning to take shape — the creation of a state earned income tax credit.

An earned income tax credit, or EITC, is an extra lump of cash refunded to low-income, working families every year at tax time. The amount a family receives varies, but it’s based on a person’s income and the number of children in the home, but only working adults qualify. The credit is meant to help struggling families get ahead and many use the extra funds to make major purchases like cars, or large appliances.

West Virginians are currently eligible for a federal EITC, but the state doesn’t offer its own. Twenty-six other states and the District of Columbia offer EITCs, according to the national Center on Budget and Policy Priorities.

Delegate Matthew Rohrbach, a Republican from Cabell County, is pushing a state EITC in the House.

“We’ve got to get our workforce participation level up,” Rohrbach said, “but it’s important to support these families as they do it.”

But with such a large budget gap to fill for fiscal year 2018, nearly $500 million, the credit would only increase the budget gap, costing the state between $60 and $80 million, according to most estimates.

Still, to balance next year’s budget, Governor Jim Justice has proposed almost $30 million in cuts and $450 million in tax increases. It’s for this reason Rohrbach says creating a state EITC is imperative.

“If those taxes do get increased as he sees, I would hope that we would realize a lot of the taxes he’s proposed are consumption taxes; that will hit the people at the bottom levels of our economy the hardest,” he noted.

Rohrbach’s bill has bi-partisan support in the House. A similar bill is in the works for the Senate.