Kentucky Youth Advocates Recommends State Earned Income Credit

Dec 3, 2013

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Kentucky Youth Advocates has released a report that says 1 in 4 Kentucky taxpayers could benefit from a state-level earned income credit.

KYA released an issue brief today that says the credit would piggyback onto the federal earned income credit. That could yield up to $337 per applicant, with little to no administrative cost to state government.

While the prospect of tax reform is looking like a long shot in next year’s budgetary session of the General Assembly, KYA Executive Director Terry Brooks says the bipartisan pedigree of the federal earned income tax credit could help usher its inclusion into the state tax code.

“You’ve got a tax idea that was invented by Richard Nixon, championed by Ronald Reagan, and most recently President Obama,” he says. “That says to state legislators this doesn’t have anything to do with ideologies, it doesn’t have anything to do with politics, it has to do with results.”

Brooks says data from the report suggests that the credit would help pay for itself by spurring spending in Kentucky communities. 

“We know that families who get earned income credits are not gonna take that refund and put it in their off-shore account,” he says. “Instead, they’re going to be spending money at the local hardware store, at the local car repair shop, at the appliance store. They’re gonna be taking their kids to the department store to buy them clothes for school.”

Last year, more than 400,000 Kentucky taxpayers claimed $912 million from the federal earned income tax credit. If enacted, a state income credit could generate an estimated $134 million more for low and middle income families.