From today’s Finance Committee meeting comes approval of HB2642. The bill slightly increases the size of the state’s Earned Income Tax Credit (EITC). The state tax credit will be in addition to the federal credit eligible people already receive. To be eligible, you must be below certain income thresholds, based on filing status and number of dependents.
According to Representative William Wainwright (D – Craven), the increase in the EITC will "help families make ends meet." Really?
According to analysis presented by the bill’s sponsors, this new law will increase the average recipient’s benefit by $24 – per year. That’s right, $2 a month. Those ends better be awfully close together if 2 bucks a month will make them meet. All told, the newly increased EITC will provide the average recipient with less than $7 per month – many of these recipients will be families. Seven bucks a month may get you a super-sized value meal at McDonalds – but making ends meet? Please.
Further, the maximum benefit estimated for a family of four is estimated to be $20 a month. Whoopee! Take the family to Golden Corral – kids eat free on Tuesdays!
So what will this minuscule benefit cost North Carolina taxpayers – about $70 million a year. Not one word in that committee meeting was dedicated to the thousands of jobs that could be created if that $70 million were left in the hands of entrepreneurs around the state. But who can think of creating jobs when you are an omnipotent state legislator who can "do something" to help poor people "make ends meet?" Why bother yourself with such trivial details like cost-benefit analysis when you can pat yourself on the back and convince yourself you are a good person because you "helped" people.
Even more maddening was the discussion that the EITC is needed to offset the high burden that state and local taxes and fees place on poor people. Why not just lower those taxes instead? For example, last year lawmakers extended the 1/4 cent "temporary" sales tax – a tax that will extract $258 million from consumers, and hit the poor the hardest. But allowing people to keep more of their money in the first place erodes the amount of money Raleigh politicians control, and therefore chips away at their power.
Of course, lawmakers will always opt to increase dependency on government programs rather than promoting financial independence in the private marketplace. They’ve figured out that the more folks that are dependent on you, the more votes you will get.