North Carolina debates Earned Income Tax Credit

Yesterday, the Charlotte Observer ran a letter from NC State Senator Eddie Goodall (R-Mecklenburg) in response to Lt. Governor Beverly Perdue’s letter in the Observer last week where Perdue endorsed a “Rewarding Work Tax Credit,” comparable to the federal Earned Income Tax Credit. Perdue lauds the program as appropriate relief for poorer families while Goodall contends that the program is neither “tax relief” or for “working families.”
Perdue-

The federal EITC returns about $1.2 billion to 766,000 working families in our state that claim the federal credit. Creating this state tax credit would put even more money in the hands of our state's low- and moderate-income working families.

Goodall-

If the lieutenant governor's proposal follows SB 514, the state's expense would amount to 10 percent of the $1.2 billion federal benefit to North Carolinians, or $120 million.

An Earned Income Tax Credit is commonly described as a work incentive, reducing or eliminating income taxes for poor and near-poor families and individuals. Currently 19 states and the District of Columbia have enacted state earned income tax credits.
Perdue-

North Carolina should join the [19] states that now provide this anti-poverty tax credit for working families. Ronald Reagan liked it. Bill Clinton liked it. North Carolina needs it.

Goodall-

I agree that taxpayers do need a break...I'll be happy to join the lieutenant governor in support of a $120 million tax break for 2007 -- but only for our workers who are actually paying tax.

For more information on state Earned Income Tax Credits, see Idea 4 of Doing Better: Progressive Tax Reform for the American South.