State earned income tax credit increase sought

The Revenue Committee heard testimony Feb. 1 on two bills that would increase the amount of a nonrefundable income tax credit for working people with low to moderate incomes.

LB69, introduced by Lincoln Sen. Patty Pansing Brooks, would increase Nebraska’s Earned Income Tax Credit (EITC) from 10 percent of the federal credit to 13 percent in 2019, to 17 percent in 2020 and to 20 percent in 2021.

Pansing Brooks cited a report released last year by the Legislature’s Intergenerational Poverty Task Force, which found that 18.1 percent of Nebraska families with children under 5 were in poverty. She said the report identified increasing the EITC as one of the most effective ways to lift working families out of poverty.

“Increases in the EITC provide a mechanism to battle poverty while rewarding hard work and families with children — and providing dollars directly back into our economy,” she said.

LB129, introduced by Lincoln Sen. Adam Morfeld, would increase Nebraska’s EITC from 10 percent of the federal credit to 11 percent in 2018 and to 12 percent in 2019.

Morfeld said the incremental changes would bring Nebraska in line with some neighboring states: Iowa’s EITC is 15 percent of the federal credit and Kansas’ is 17 percent. He said the EITC is an effective anti-poverty tool that encourages low-income people to work.

“Many low-income jobs fail to provide sufficient income on which to live,” Morfeld said. “Refundable, earned income tax credits provide low-income workers with a needed income boost that can help them meet their basic needs and pay for the things that allow them to work, like transportation and child care.”

David Piester, a volunteer for the Center for People in Need, testified in support of the bill. He said the majority of the center’s clients live on about $1,250 a month and often must work more than one job to make ends meet. He said increasing the credit would help more of Nebraska’s low-income families work their way out of poverty.

“Allowing them to keep more of their earnings will go a long way in keeping them afloat financially,” he said, “potentially raising their standard of living and forestalling bankruptcies.”

Kaitlin Reece, policy coordinator for Voices for Children, said that many low-income families use the EITC to help pay for child care, car repair, rent and groceries. Between 2009 and 2011, she said, Nebraska’s EITC kept nearly 20,000 children out of poverty.

“The investments we make in working families through the EITC put children on a solid path to a prosperous future,” she said.

No one testified in opposition to the bill and the committee took no immediate action on it.