EITC vital in Rural and Small Town Nebraska - Center for Rural Affairs testifies in favor of LB 495

Release Date: 

03/04/2015

Contact(s): 

John Crabtree, johnc@cfra.org, (563) 581-2867 or (402) 687-2103 ext. 1010
or Jon Bailey, jonb@cfra.org, (402) 687-2103 ext 1013

Lincoln, Nebraska - Today, the Nebraska Legislature’s Revenue Committee is hearing public testimony on LB 495 - a legislative proposal that would increase the state Earned Income Tax Credit to 13 percent of the federal EITC for tax years 2016 and beyond (up from the current 10 percent).

A group of Nebraskans that has been generally missing from tax policy discussions are low-income working Nebraskans. That is why LB 495 is so important. It is the one piece of tax policy that truly benefits these families.
Jon Bailey, Rural Policy Director
Center for Rural Affairs

To view or download copies of Bailey’s Center for Rural Affairs testimony go to:
http://www.cfra.org/LB-495-testimony

 
“Our research details the many benefits of the Earned Income Tax Credit in alleviating poverty and for many aspects of family life, especially in rural and small town Nebraska,” Bailey testified. “The credit is unique among many areas of domestic policy over the past several decades – it is a true bipartisan effort, lauded by officials in both parties, introduced by President Nixon, implemented by President Ford, praised by President Reagan, and expanded by President Clinton.”
 
Along with his testimony, Bailey also presented Committee members copies of a report released last fall by the Center for Rural Affairs concerning the usage of the federal Earned Income Tax Credit. Bailey pointed out that since Nebraska’s earned income tax credit is connected to the federal tax credit the analysis and findings are the same for both.
 
“Clearly, the earned income tax credit is important to many families in rural Nebraska and in our mid-size cities. Many families depend on the credit for its poverty alleviation benefits and a stronger state credit will enhance those benefits,” concluded Bailey. “For those reasons we respectfully request that you advance LB 495.”
 
To view or download a full copy of the Bailey’s EITC report go to: http://www.cfra.org/sites/www.cfra.org/files/publications/EITC-final_0.pdf
 
According to Bailey, the report analyzes the usage of the federal earned income tax credit for tax year 2012, the most recent data available, by county types for each state. The three county types examined were: metropolitan – counties part of a metropolitan statistical area as designated by the U.S. Census Bureau; micropolitan – counties based around at least one core urbanized area with a population of 10,000 to 49,999; and rural – essentially, every other county not in the other two categories.
 
Nationally, micropolitan and rural counties – the two smallest categories in terms of population – have the largest usage of the federal Earned Income Tax Credit as a percentage of all federal tax returns claiming the credit. The national data is in the table below.

Place of Residence

Total Individual Federal Income Tax Returns (2012)

Total Individual Federal Returns Claiming EITC (2012)

Pct. of all  Individual Federal Returns Claiming EITC (2012)

United States

144,276,600

24,745,200

19.2%

Metropolitan

122,107,900

22,976,820

18.7%

Micropolitan

 11,630,220

 2,513,310

21.6%

Rural

 10,535,400

 2,255,610

21.4%

 

 
Nebraska data reveals a similar pattern. Nebraska usage of the federal credit is broken down as follows as a percentage of tax returns claiming the credit:
 
Statewide: 16.0%
Metropolitan counties: 15.6%
Micropolitan counties: 17.4%
Rural counties: 15.8%

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