February 2, 2010

   Sen. Harold M. Metts, 401-276-5561

Sen. Metts bill increases earned income tax credit

            STATE HOUSE – The federal Earned Income Tax Credit has been called the most effective anti-poverty program in the nation.

Rhode Island is one of a number of states that offer refundable EITCs, supplementing the federal credit and proving valuable to families earning income below the federal poverty level. (Four other states offer non-refundable credits.)

            “It’s good that we provide a state earned income tax credit,” said Sen. Harold M. Metts (D-Dist. 6, Providence), “but it is not enough. Only 10 percent of Rhode Island’s credit is refundable to tax filers. Since the maximum state refund a Rhode Island family can claim is 10 percent of 25 percent of the federal maximum of $4,400, it works out to only $110.”

            The 10 percent refund may be valuable to poverty level families by offsetting any income taxes owed to the state, “but it doesn’t put any money into the pockets of people who truly, desperately need it. We are talking about families living below the poverty level. As human beings, as a government, we need to do much, much more to help these individuals.”

            Senator Metts again this legislative session will introduce a bill to increase the Rhode Island refund tenfold by changing current law to read that “one hundred percent (100%) of the excess Rhode Island earned income credit will be refunded for the 2006 taxable year and each taxable year thereafter.”

 “At our current 10 percent refund, and a maximum credit of $110, the poorest of our state’s working families – the ones with income so low they owe little or no state income tax – see little if any real benefit from the state’s earned income tax credit,” said Senator Metts. “These are the people most in need, the people for whom a little bit to supplement their earnings means a great deal.”

“We offer tax credits to businesses to promote economic development in Rhode Island, and I support those programs because a better economy helps put more state residents to work,” said Senator Metts. “But if we want to reduce child poverty, encourage individuals to work and keep families whole, we need to cut taxes for families struggling to make ends meet. My bill is a step in that direction.”

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