There may be interest at the state capitol next year in beefing up Oklahoma’s Earned Income Tax Credit.
Oklahoma’s credit offers low-income families significantly less than other states' credits do — as much as a $435 difference in some cases — and lawmakers made it non-refundable in 2016, so those families get no money back in their pockets.
Republican former state Rep. Mark McCullough was involved in talks leading to the credit being slashed. He said it should at least be made refundable again, if not increased.
"Certainly, a doubling of it wouldn’t be irresponsible. It would be incremental, and it would be effective," McCullough said.
The year after lawmakers made the Earned Income Tax Credit non-refundable, the Oklahoma Tax Commission paid out just $28 million less. McCullough said the way the credit is structured makes it an effective incentive for people to work.
Making the credit non-refundable cost 200,000 low-income families an average of $120 they used to get back from their state taxes. Ken Levit with the George Kaiser Family Foundation said wealthier families would probably just save that money.
"But, if I’m a low-income Oklahoman, I’m probably going to go out and spend that money at the drugstore, the laundry shop, et cetera. So, money is immediately injected into the economy," Levit said.
Levit cited a study saying every dollar spent on the Earned Income Tax Credit has an economic impact of $1.50 to $2.
Early childhood expert Dr. Amy Tate said giving low-income families money back from the credit would set their kids up for brighter futures.
"The impacts of poverty on early brain development — as well as the ability of caregivers and parents to form and nurture high-quality interactions young children, which in turn fosters brain development — they’re affected by the stressors of poverty," Tate said.
Democratic state lawmakers have made restoring refundability of the Earned Income Tax Credit a priority of their party.
