The Case for a State Earned Income Tax Credit

Once called the “best anti-poverty, the best pro-family, the best job creation measure to come out of Congress” by President Ronald Reagan, the Earned Income Tax Credit (EITC) directly benefits almost one in three tax filers in Mississippi.1 More than 366,000, or nearly one-third (32%) of the federal tax filers in Mississippi claimed the EITC in 2004. In 2008, the credit is projected to bring into the state $852 million that can be used to build local economies.2 Families claiming the federal EITC live in all of Mississippi’s 82 counties, and every legislative district benefits from the EITC.3 There are at least 1,700 filers in every House district and at least 3,200 filers in every Senate district that would benefit from the program (See Appendices A, B and C to see the economic benefit and number of people assisted by a state EITC by County, House District and Senate District).

Due in large part to the demonstrated success of the federal EITC, twenty-two states and the District of Columbia have their own EITC programs that enhance the benefits of the federal program by increasing workforce participation, implementing a tax system that supports the efforts of working families and boosting local economies. Louisiana and North Carolina recently enacted state Earned Income Tax Credits.