Metropolitan Family Services

July 6, 2008

Policy initiatives

Vote Yes on SB12

(Collins-Forby-Clayborne-Holmes-Hunter, Harmon, Raoul, Lightford, Trotter, Ronen, Pankau, Silverstein)

Help Working Families: Grow the Illinois EITC

What is the Illinois Earned Income Tax Credit?

It's the only tax benefit that expressly encourages and rewards work — a tax credit that last year benefited nearly 765,000 low-income, working families statewide. It is based on the federal EITC, which long has enjoyed strong bipartisan support.

Who benefits and how?

To claim the EITC, taxpayers must be both low-income and working. Families with earnings up to $37,263 qualify. However, because the Illinois EITC is set at only 5 percent of the federal EITC, the maximum amount of the Illinois credit is only $220 — the lowest in the nation.

Why the EITC?

It's a work incentive — available only to working households, and helping to lift our lowest-paid workers out of poverty.
It eases taxes — helping to offset low-income families' unfairly large share of state and local taxes. In tax year 2003, the poorest one-fifth of Illinois households paid about 13 percent of their incomes in state and local taxes, while the wealthiest 1 percent spent less than 6 percent of theirs on such taxes.
It provides "economic stimulus" to local communities — helping people save more money and invest it in neighborhood stores, banks and other businesses.

How can it be improved?

The Illinois EITC should be increased gradually, to provide families and communities with more of the help they need. Illinois' maximum EITC of $220 per family is the smallest of the nation's 21 state EITCs, which range as high as $1,892 (Wisconsin) and $2,024 (Minnesota).

SB12 would increase EITC assistance for struggling families through a stairstep approach:

In FY2008, the Illinois EITC would rise to 7.5 percent of the federal credit, for a maximum value of approximately $330 per qualifying family;
In FY2009, it would rise to 10 percent of the federal credit, for a maximum state EITC of about $440.

For more information, please contact: Sean Noble (312-516-5566, snoble@voices4kids.org) or Maneesha Date (312-516-5568, mdate@voices4kids.org) at Voices for Illinois Children. See reverse for list of Make Work Pay campaign supporters.