TO:   Members of the Wisconsin Legislature

FROM:   Kim Wadas, Executive Director, Wisconsin Catholic Conference

               Rev. Cindy Crane, Director, Lutheran Office for Public Policy in Wisconsin

               Peter Bakken, Coordinator for Public Policy, Wisconsin Council of Churches

 DATE:   September 13, 2017

      RE:   Wisconsin's Earned Income Tax Credit (EITC)

 

As representatives of faith communities in Wisconsin, we are disheartened that provisions expanding Wisconsin's Earned Income Tax Credit (EITC) within the state budget proposal have been removed.  As a society, we have a responsibility to preserve human dignity and advance the common good by forwarding public policies that address the needs of the poor, disadvantaged, and marginalized.  The EITC increases workers' incomes, thus enabling those living in poverty to lead more dignified lives and contribute more fully to the life of their community.

 

Both the federal and state EITC increase the incomes of low-wage workers and thus encourage work.  The state EITC is calculated as a percentage of the federal credit.  However, unlike the federal credit, the state does not provide a credit to childless adults.

 

Governor Walker's budget proposal would have increased the EITC credit rate for parents with one child from 4 to 11 percent of the federal credit starting in the 2018 tax year.  Under the Governor's proposal, newly married couples would have been able to avoid credit reductions due to their marital status.  Noncustodial parents who meet their obligated levels of child support payments would have been eligible to receive the credit.

 

Poverty scholars, including the University of Wisconsin Institute for Research on Poverty (IRP), have demonstrated that the EITC has a significant impact on helping families fend off poverty.  In its most recent Wisconsin Poverty Report, the IRP noted that "The second largest antipoverty effect was from tax provisions such as the EITC." [1]

 

For decades national leaders from both sides of the aisle have supported the EITC.  President Gerald Ford signed the EITC into law in 1975 and President Ronald Reagan approved one of several EITC expansions as part of the Tax Reform Act of 1986.  In his 2014 proposed budget as Chairman of the House Budget Committee, Speaker of the House Paul Ryan noted the importance and value of the EITC to working adults, describing it as one of the "most effective anti-poverty programs." [2]  Indeed, Speaker Ryan recommended increasing the credit for childless adults.

 

Given the success of the EITC in raising incomes and encouraging employment, we urge you to restore Governor Walker's proposals.  For our part, we remain committed to working with you to improve the lives of all Wisconsin residents.

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