Proposal to do away with earned income tax credit moves forward

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OKLAHOMA CITY – A bill that would do away with a tax credit to help the poorest Oklahomans is moving forward.

The Oklahoma House has voted to adjust the earned income tax credit claimed by 355,000 low-income Oklahomans.

The credit gives money back to the poorest Oklahomans who don’t make enough to even pay taxes.

The House voted 51-45 for the Senate-passed measure and sent it to Gov. Mary Fallin to be signed into law.

The vote occurred at 12:24 a.m. Friday after House members suspended a rule that requires them to adjourn by midnight.

The measure makes the earned income tax credit nonrefundable effective this tax year.

The state credit is equal to 5 percent of the federal earned income tax credit.

Officials say the measure will increase state income tax collections by about $29 million in 2017.

Opponents say it targets the working poor.

But supporters say it is needed to help fill a $1.3 billion hole in next year’s state budget.

Oklahoma Policy Institute Executive Director David Blatt issued the following statement regarding the passage:

The legislators who voted to slash Oklahoma’s Earned Income Tax Cut (EITC) have made a deplorable decision. They decided that more than 200,000 working families, most with children, will lose up to $300 per year. These legislators voted to worsen the daily struggles of families to make ends meet and increase the burden on private charities. The same low-income working families who will lose this credit already pay a much greater share of their income in state and local taxes than wealthier Oklahomans. By cutting the EITC, we are asking the working poor to shoulder even more of the load.

Legislative leaders say this move was needed as part of their plan to help fill the state’s massive budget shortfall. We must not forget that this shortfall was caused in significant part by Republican leaders’ obstinate insistence on moving ahead with a $150 million tax cut that primarily benefits high-income households, on top of a decade of tax cuts that have grown to more than $1 billion per year. In fact, this year’s tax cut for just the wealthiest 1 percent of households will cost the state more than what is saved from cutting the EITC.

Blatt also released a statement regarding the measure that would eliminate double tax deduction.