Addabbo Urges State To Up Earned Income Tax Credit
Councilman Joseph P. Addabbo, Jr. has announced his sponsorship of a Resolution in the City Council, calling on the State Legislature to adopt and the Governor to sign legislation to enable New York City to increase the City Earned Income Tax Credit from 5% to 10% of the federal credit.
The Earned Income Tax Credit (“EITC”), first enacted by the Federal Government in 1975, reduces tax burdens and provides city taxpayers with a tax credit on federal personal income taxes that can exceed the taxes paid.
The EITC is a refundable tax credit so that if a worker’s income tax liability is less than the amount of the credit for which he or she qualifies, the worker receives the remaining amount as a refund. Councilman Addabbo said that studies have shown that families use the EITC to pay for necessities, pay tuition, make home and car repairs, and in some cases, obtain additional education or training which in return can increase earning power.
The State of New York, since enacting a New York EITC in 1994 (equal to 7.5% of the federal EITC), has expanded its benefit and currently offers an EITC equal to 30% of the federal EITC that provides approximately $700 million annually in tax credits to eligible taxpayers.
Addabbo noted that at the Council’s urging, the State in 2004 authorized the City to adopt an EITC and the Council by local law adopted a City EITC equal to 5% of the federal credit. As a result of this program, it is estimated that over 700,000 New York City individuals and families have benefited. “When possible, elected officials should do everything we legally and legislatively can to financially assist our constituents and their families,” Addabbo stated.
According to the City figures, the total EITC (Federal, State and City) in the last tax year is estimated to have returned $1.5 billion dollars back to working families, not only benefiting individuals and their children, but also putting these dollars into New York City businesses and services.
Research indicates that the EITC provides targeted tax benefits to moderate and low-income taxpayers, encourages work, and assists families and communities.