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Tax Relief for Utah Workers: A State EITC?
Jan 09, 2013 | 441 views | 0 0 comments | 3 3 recommendations | email to a friend | print

Chris Thomas

Utah News Connection 

SALT LAKE CITY — Some momentum may be building in this year's Utah Legislature to enact a state Earned Income Tax Credit.

The credit could be claimed only by low-wage workers, and the most recent proposals have pegged it at 5 percent of the federal EITC. In past years, state lawmakers couldn't agree on how to fund it, at an estimated $21 million. But Utah is doing better financially, according to state budget forecasts, and Tracy Gruber, policy analyst for 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 with 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. Slightly more than 18 percent of taxpayers in Utah claim the credit, according to a study by the Carsey Institute at the University of New Hampshire. Gruber says that money lifts more than 33,000 Utah children above the poverty line.

The federal EITC can range from a few hundred dollars to almost $6,000, depending on income and family size. A 5 percent state EITC would be much more modest, but Allison Rowland, Voices for Utah Children's director of budget and research, says it still would 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.'"

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

Gov. Gary Herbert has voiced his support for the federal EITC, but a state EITC wasn't included in his new budget.

The Carsey Institute report is online at carseyinstitute.unh.edu.

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