Last-minute decisions often do not yield good public policy. Congress has demonstrated this repeatedly. Consider last summer’s raise-the-debt-ceiling circus. Or more recently, the midnight-hour deal to extend the payroll tax cut only for a couple of months.
The Oregon legislature would be wise to avoid such last-minute wrangling, especially when it concerns a matter vital to low-income working families with children. Rather than wait until the 2013 legislative session, when they will be bumping up against a deadline, lawmakers should act in the 2012 session to extend the Oregon Earned Income Tax Credit (EITC), which is set to expire at the end of 2013.
The EITC rewards the work effort of families — mostly families with kids — whose jobs pay very little. The credit helps offset income taxes and other types of taxes. This allows cash-strapped families to keep more of what they earn, so that they can put food on the table, pay for transportation or health care or cover other basics.
The EITC is efficient and effective. That’s why it enjoys a long history of bipartisan support. President Ronald Reagan, for example, hailed the federal EITC as “the best antipoverty, the best pro-family, the best job creation measure to come out of Congress.”
The Oregon EITC is a small but important complement to the federal credit. It offers $6 for every $100 of the federal EITC. It helps about one in seven Oregon households make ends meet.
With the Oregon EITC scheduled to sunset on January 1, 2014, the last opportunity for the legislature to extend the credit will be in the 2013 session.
But if the legislature waits until then to decide, more than 220,000 Oregon households who rely on the state EITC will have to hold their breath as they await a resolution. Will the Oregon EITC be there to help make ends meet?
If anyone needs certainty to plan for the future, it is those families who live paycheck-to-paycheck.
Putting off action until 2013, moreover, risks that the EITC — or some portion of it — may be sacrificed to fund a tax subsidy that is someone else’s pet project. In 2013, the legislature’s joint tax credit committee will have a limited amount of money to spend. Other tax credits, some backed by corporate and wealthy interests, will vie for funding. The low- and moderate-income families who rely on the EITC may not be able to win an extension when matched against well-heeled political powerhouses.
The sway of deep-pocketed interests was in full display in the waning days of the last legislative session, when lawmakers created the New Markets Tax Credit (NMTC). Oregon’s NMTC doubles the subsidy for investors, including Wall Street banks, already benefiting from the federal NMTC. Although the subsidy is intended to spur jobs in low-income communities, nothing in the program requires the investors pocketing the subsidy to create good paying jobs.
Extending the EITC this year would avoid the risk of the EITC getting squeezed out by Wall Street-backed tax subsidies. And it would not add costs to the current budget because the extension would not take effect until the next budget period.
By lengthening the life of the credit this session, the legislature would show support for Oregon’s struggling families. It would signal that lawmakers recognize that poverty harms families and the economy, and understand the imperative of reducing it.
We elect our lawmakers to enact responsible public policy. In the 2012 legislative session, they can act in accordance with this obligation by voting to extend the Oregon EITC.
