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Utah News
3:35 pm
Tue January 15, 2013

Legislature to Debate State Tax Credit for Low Income Families

When the Utah Legislature convenes later this month, one topic to be debated is whether to enact a state Earned Income Tax Credit (EITC) for low-wage workers. The number of Utah families using the federal EITC has been climbing, but previous attempts to create a state EITC have failed. Comments are from two staff members at Voices for Utah Children: Tracy Gruber, policy analyst; and Allison Rowland, director of budget and research.


There may be some momentum in this year's Utah Legislature to enact a state Earned Income Tax Credit.

100 dollars is no small amount for a family living on the edge. It could pay for a few months' worth of diapers, or cover the vehicle registration and emissions testing fees for the family car.

It could be claimed only by low-wage workers, and the most recent proposals have pegged it at five percent of the federal Earned Income Tax Credit. In past years, state lawmakers couldn't agree on how to fund it, at an estimated 21-million dollars. But Utah is doing better financially, according to state budget forecasts, and Tracy Gruber with Voices for Utah Children says the EITC is sure to come up again.

"There certainly is support within the Senate, as we saw last year – it passed the Senate on second reading and then, did not pass on third due to lack of funding – and a bit more interest in the House."

Compared to other states, Utah has seen one of the highest increases in the number of people using the federal EITC since the start of the recession. Just over 18 percent of taxpayers in Utah claim the credit. Gruber says that money lifts more than 33-thousand Utah children above the poverty line.

The federal EITC can range from a few hundred dollars to almost six-thousand, depending on income and family size. A five percent state EITC would be much more modest. But Allison Rowland with Voices for Utah Children says it would still send an important message.

"It’s something that serves as a symbolic way of saying, ‘We understand that many jobs are low-paying, but we want you to work. As a state, we think work is important, for many reasons.'"

Rowland points out that even 100 dollars is no small amount for a family living on the edge. It could pay for a few months' worth of diapers, or cover the vehicle registration and emissions testing fees for the family car. Governor Herbert has voiced his support for the federal Earned Income Tax Credit, but a state EITC wasn't included in his new budget.