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The current federal Child Tax Credit (CTC), which provides up to $2,000 per child, is designed to provide an income boost to parents or guardians of children and other dependents. However, many low-income families do not receive the full benefit of the federal credit due to an earnings requirement and lack of full refundability for families with low incomes. A state-level CTC could redress some of the shortcomings of the current federal credit. By eliminating the requirement for earnings, along with the phase-in, and making the credit fully refundable, low-income families would be eligible for the full benefit, ultimately reducing child poverty.
In offsetting federal income and payroll taxes and supplementing the earnings of low-wage workers across the country, the Earned Income Tax Credit (EITC) is one of the most effective anti-poverty programs in the U.S. However, the EITC provides little or no benefits to workers without children; for childless adults, aged 25 through 64, the maximum credit is small and the income limits are restrictive. The tables in this report outline the benefits of relaxing age requirements under state EITCs to include both young and older childless adults; they also identify the impact of bringing existing state EITCs for that population up to 100 percent of the federal credit to help counteract shortcomings in the federal credit’s design.
Thirty states and the District of Columbia (D.C.) allow a broad category of tax subsidies known as itemized deductions, used to reduce taxpayers’ taxable income. Itemized deductions are regressive, offering the largest benefits to higher-income taxpayers and little or no benefits to low and middle-income families. Additionally, Black and Hispanic families tend to receive smaller tax cuts from itemized deductions than white families. This report outlines options state lawmakers can take to address these problems, including outright repeal, applying broad-based phase-outs or caps, and limiting specific deductions such as for mortgage interest on second homes or for charitable gifts constituting a small percentage of income.
While Connecticut’s working families are struggling with low wages, threats of eviction, food instability, lack of affordable health care, and high levels of unemployment amidst the COVID-19 pandemic, Connecticut’s wealthiest residents have amassed unprecedented wealth. In response to the state’s high rates of income inequality and extreme wealth gaps, Connecticut must adopt an equitable state budget that repairs the regressive tax structure by requiring billionaires to pay their fair share, invest in key programs and services to aid struggling communities, and take major steps towards eliminating racial and economic disparities.
Building a stronger Hawai'i for businesses and residents means creating more opportunities for working families to climb the economic ladder. The Earned Income Tax Credit (EITC) is a proven tool for fostering economic prosperity. The federal EITC is a tax credit that reduces or eliminates workers' tax liability. This policy report proposes that Hawai'i creates a state refundable Earned Income Tax Credit that will work to put money back into the community and thus strengthen local economies. The authors point to three main benefits of a refundable EITC: to help struggling families, local businesses, and working families. The report concludes with a list of possible new revenue sources which would allow Hawai'i to afford a state EITC.
Hawaii's lower-income families are faced with almost insurmountable structural challenges to escaping poverty. They face the highest cost of living and highest cost of shelter in the nation. At the same time, Hawaii's wages are the lowest in the nation when adjusted for the cost of living, and people in poverty pay more in taxes than residents in all but three states. This report is aimed at identifying new policies that can make real differences in the lives of individuals and families struggling to make ends meet. The report recommends that during its 2014 session, Hawaii's legislature adopt a package of five policies that will significantly increase the economic vitality of their low and moderate-income residents.
This annual report brings together the most recent available data to provide a snapshot of how low-income residents in Hawaii have fared after the economic recovery. The report highlights the topics of poverty, tax burden, housing, hunger, and education. In addition to this, the authors offer key recommendations on how to alleviate burdens associated with these topics and thus improve the quality of life for Hawaii's residents.
The United States needs to address growing inequality and raise more revenue to fund critical public investment. One way to accomplish both goals is to enact legislation that raises taxes for high-income or high-wealth households. This infographic includes figures that demonstrate the following four points: the U.S needs to address inequality, the U.S needs more revenue, the U.S tax system is not solving these problems now, and the public supports using progressive taxes to solve these problems.
Flat or graduated personal income taxes drive income inequality and racial wealth gaps. This brief compares Illinois’s flat income tax structure to the proposed Fair Tax amendment through a retrospective analysis. It shows that Illinois’s historic flat income tax in lieu of a graduated rate tax (used by most states) results in a tax subsidy for the wealthiest Illinoisans that compounds income inequality and racial wealth gaps.
President Joe Biden’s COVID-19 relief package, the American Rescue Plan, includes a significant expansion of the Child Tax Credit (CTC). The proposal provides a $125 billion boost in funding for the program, which would double the size of the existing federal credit for households with children. This infographic explains the benefits of this expansion and their potential impact on different racial and income groups.