A diverse group of community and nonprofit leaders representing hundreds of thousands of ordinary Louisiana citizens is asking the Louisiana Legislature to strengthen the Earned Income Tax Credit as part of its revenue deliberations.
An open letter to the Legislature notes that renewing part of the “clean penny” of sales tax, which is necessary to avoid deep budget cuts, will hit low-income households the hardest. The best way to offset that impact, and make Louisiana’s tax code more fair to low-income working families, is by increasing the EITC to 10 percent of the federal credit.
“Relying on a sales tax renewal without expanding the EITC would amount to balancing the state budget on the backs of low-income residents,” said the letter, which is signed by the leaders of 15 regional and statewide organizations.
The EITC has a tradition of bipartisan support and is the single most effective policy tool for reducing child poverty. The EITC encourages and rewards work, and helps parents stay in the workforce and work more hours. A growing body of research has found it has immediate and long-term benefits for children, who are more likely to complete school and enjoy higher earnings as adults.
Louisiana was the first Southern state to enact a state EITC in 2007, which is tied to the federal credit. But at 3.5 percent of the federal credit, Louisiana’s EITC is one of the lowest in the country. The credit is currently claimed by nearly 1 in 3 Louisiana households.