Relief could be Provided Through Earned Income Tax Credit
Illinoisans have rejected the Fair Tax Agreement. However, an advocacy group has suggested that relief could also be provided through the expansion of the Earned Income Tax Credit. Harish Patel, director of Economic Security for Illinois, issued a statement Thursday saying Illinoisans have rejected the Fair Tax Amendment, but need a solution that works for the working Illinoisans.
The statement read, “The Fair Tax Amendment didn’t win the support needed from Illinois voters for the state to abandon its flat income tax. Rather than signify a need to stop talking about tax equity, Tuesday’s results emphasize the urgent need for solutions that work for working Illinoisans. Illinois’s General Assembly should pass an expansion of the Earned Income Credit to put cash into the pockets of hard-working families that need it most.”
The Earned Income Tax Credit or EITC is an established but often overlooked program. The EITC provides tax rebates for low-wage workers. Conservative University of Chicago economist Milton Friedman in the ‘70s proposed the “negative income tax” and the EITC grows out of it. Illinois offers an 18 percent match on the federal program for workers, the majority of whom earned less than $60,000, with a state tax rebate of up to $1,157.
The General Assembly is pending proposals to double the figure to 36 percent. Patel is suggesting to expand eligibility to those making $75,000 and also timing rebates, perhaps quarterly, to spread the benefits over the full year rather than just at tax time when workers file their returns.
Pritzker administration took efforts to streamline the enrollment process. Patel said, “The voters have been clear. They want the state to reduce the tax burden on low-income families.” Patel added that voters want the certainty that they can grow wealth, especially with COVID-19 threats.
