Report: Military Families' "Independence" Depends on State Tax Plans
Photo: Military families rely on state and federal EITC to survive. Courtesy: U.S. Navy
July 3, 2013
RALEIGH, N.C. - As the nation gears up to celebrate Independence Day, those who have fought hard to defend it may be fighting a new tax proposal in the North Carolina General Assembly. House Bill 998 would let the state Earned Income Tax Credit expire.
Allan Freyer, public policy analyst for the North Carolina Budget and Tax Center, analyzed a new national report on tax credits for military families and found that the expiration of the state EITC would impact 64,000 North Carolina military families alone.
"You cannot receive the Earned Income Tax Credit if you do not work," he said. "Who works harder than our soldiers and their families? We see this as an important way of rewarding work, as opposed to promoting dependency."
The state EITC offers an average credit of about $272 a year for most families, which doesn't sound like a lot but, combined with the federal EITC, is enough to keep many families just above the poverty line. It would also affect more than 900,000 nonmilitary families.
The Senate tax plan being debated this week also allows the EITC to expire for low-income families, and it also gradually would eliminate the state tax on corporate income, which generates $5 billion in revenue a year. Freyer said the state EITC costs only a fraction of that, at $105 million annually.
"We are paying for big corporate tax cuts by taking it out of the pockets of military families in our state," he said, "which, we think is bad economics - and it's also, I think, bad morally. "
Supporters of eliminating corporate income tax insist that it is necessary to grow business in the state.
According to a national report from the Center on Budget and Policy Priorities, the federal EITC keeps more than 140,000 families nationwide from falling below the poverty line and reduces the severity of poverty for another 800,000 members of military families. That report is online at cbpp.org.
The text of HB 998 is online at openstates.org.