Matthew Rohrbach: Time for W.Va. to enact earned income tax credit
It is critical that we invest in our working families throughout West Virginia. As such, we would like to take a moment to draw attention to a bipartisan policy that does just that, boosting incomes for hundreds of thousands of our workers, while strengthening our economy in the process. It’s called the Earned Income Tax Credit (EITC) and it’s a tax break for working families earning low wages.
At the federal level, the EITC enjoys strong bipartisan support and is considered the nation’s largest and most successful anti-poverty program. 29 states and the District of Columbia have enacted their own version of the EITC to help low-wage families meet basic needs. West Virginia has the potential to become the 30th, and we should seize that chance.
It’s important to remember that the EITC only goes to working families and is designed to reward their efforts. For workers with very low wages, the EITC encourages them to work more hours where possible.
A state EITC would provide over 140,000 West Virginia households with an increase in their incomes at tax time, reduce the number of children living in poverty and improve their chances of success as adults. It would allow these low- and moderate-income families to keep more of their earnings to help pay for things that help them keep working, such as child care and transportation.
Research shows that children in low-income families that get an income boost like the EITC tend to do better in school and earn more as adults.
The EITC puts money in the hands of people most likely to spend it, stimulating local economies. Studies estimate that each additional dollar received by an EITC recipient can generate up to twice as much in local economic activity. We estimate that a state-level EITC in West Virginia would create an additional $47 million in annual economic activity, including over $900,000 supporting nearly 3,000 households right here in District 17.
Further, a state-level EITC would be straightforward to administer - states don’t need to spend significant resources determining eligibility for the credit, since in most cases families eligible for the federal credit are eligible for the state credit. And because they are targeted to low- and moderate-income households, the cost to state revenues is more modest than other potential tax breaks.
States even have the option to leverage Maintenance of Effort TANF funding (that’s the money we put up for the federal matching funds) to cover the refundable portion of the credit.
This is something we should seriously consider, as the percentage of these funds required to be dedicated to work-related activities is something West Virginia has historically struggled with, not unlike our workforce participation rate, which would also be positively impacted by the creation of a state EITC.
On top of that, convincing research suggests that state EITCs are driving more working families to claim the federal tax credit, thereby increasing family security and bringing larger economic returns to states that have their own version of this successful policy.
These are just a few of the reasons we will continue to co-sponsor and fight for this critical investment in our working families. West Virginia took a positive step this past session. We must keep the momentum going and make our state the 30th to have its own version of the Earned Income Tax Credit.
Matthew Rohrbach, a Republican, and Chad Lovejoy, a Democrat, are members of the West Virginia House of Delegates representing the 17th District, which includes parts of Cabell and Wayne counties.