April 28, 2016
This tax season, more than 330,000 Kansas businesses were exempt from paying taxes. While those businesses obviously benefited from the tax exemption, there is no evidence that – as promised – the benefits will spill over to the larger economy.
The failure of the tax exemption stands in contrast to the unheralded ongoing success of another part of the tax code, the state-level Earned Income Tax Credit (EITC). The EITC is a refundable tax credit intended to offset both state and local taxes for workers who earn low to moderate wages. At tax time, the EITC leaves working Kansans with more of what they earn so they can do more than just get by.
In Kansas, almost 213,000 people – just over 17 percent of the state’s tax filers – claim the EITC, with an average rebate of almost $400. Not only does the EITC enable families to cover daily expenses, afford unforeseen costs or make investments to improve their financial situation, but these dollars go right back into our state economy. When low-wage workers can keep more of what they earn, they have more money to put back into their local communities.
Due to the ongoing budget crisis, Kansas is facing tough times and is having to make even tougher decisions about tax dollars. From road maintenance to school funding, there’s more than enough uncertainty within the state. But in its current structure, the EITC is a small investment with big impact that provides some solid ground for families to stand on.
Rather than promoting failed tax policy that only cushions one segment of the state’s population, policymakers should stand behind the tax credit that works for all of us.
Read more from The Collegio here.