With inflation soaring, some are calling for an income tax change for low-income Illinois residents.
Lawmakers and advocates say low-income families are spending more of their income on meeting basic needs, which has become difficult as prices rise.
Two bills in the Illinois State House would expand the Earned Income Credit (EIC) and create a Child Tax Credit (CTC), which sponsors say would give nearly $5 million Illinoisans More Money at Tax Time.
“It’s been proven to affect poverty,” said Rep. Carol Ammons, D-Champaign, sponsor of HB4920. “This is an anti-poverty policy that we know works and brings direct relief to people.”
Under the legislation, 1.2 more Illinois would be newly eligible for EIC, and 3.6 million existing EIC recipients would receive more financial support.
According to a report by the bipartisan Center for Fiscal and Fiscal Accountability, spending on the EIC and CTC would create $1 billion in local and statewide economic benefits.
“It really puts money back in workers’ pockets, so it increases their income so they can spend it in the economy,” said Allison Flanagan, associate director of budget and policy at the CTBA. “You kind of get this duplication effect. It helps the household and those households will spend money.
The federal Build Back Better Act called for extending a temporary federal child tax credit for at least one year, but the legislation has stalled.
Illinois currently does not have a CTC at the state level. Flanagan said that in addition to reducing poverty and stimulating the economy, the refundability feature would create an efficient, as well as administratively easy, way to make the tax burden fairer.
“This invoice would only cost 1% of the state’s total general fund revenue, so it’s such a small drop in the ocean for such a large impact,” Flanagan said.