Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SATURDAY, October 28, 1995 TAG: 9510300027
SECTION: VIRGINIA PAGE: A-5 EDITION: METRO
SOURCE: LESLIE TAYLOR STAFF WRITER
DATELINE: LENGTH: Medium
The budget bill passed by the House of Representatives this week would increase the tax burden on many of the working poor by scaling back the Earned-Income Tax Credit, available to families earning up to about $27,000 a year.
The tax credit is a government subsidy to keep the working poor above the poverty line. The credit was enacted in 1975 to encourage families to work rather than go on welfare. Since then, Congress has expanded the credit with the goal of making more families eligible.
"What it says to families is, 'Because you will get this tax credit when you work, you are financially better off working than you would be if you went on welfare.' ... In the absence of the tax credit, the exact opposite may well be the case," Boucher said at a news conference at the Roanoke Regional Airport Friday before heading to the New River Valley for meetings.
If the goal is getting more people to work and off the welfare rolls, Congress should consider increasing the tax credit rather than cutting it, Boucher said.
Boucher's congressional territory - the Ninth District, which covers much of Southwestern Virginia - has more families who qualify for the tax credit than anywhere else in the state, Boucher said. In the past two years, Boucher has promoted the availability of the tax credit and how families can claim the benefit.
An estimated 95,000 families in the Ninth District qualify for the earned-income credit, he said. It is a "refundable" credit, meaning low-income working families who qualify can receive a check from the government even if they owe no federal income tax. If they've paid the tax and the credit is greater, then applying for the credit will bring a check for the difference.
A companion bill in the Senate that includes the same earned-income credit cut as the House bill passed 52-47 early this morning.
On a related matter, Boucher said Virginia is well-poised for the coming federal welfare changes. Though work is still under way on legislation that would take the federal welfare system and hand it over to 50 state governments to manage, "I would anticipate very few changes being made in Virginia's law" once the legislation passes, he said.
"Virginia has taken a very positive step to prepare itself for the time when most welfare decisions will be made at the state level," Boucher said. "Now, almost every other state in the country is going to have to do overtime in the next two to three years to do what Virginia did this year."
Virginia's new welfare plan cuts off recipients' Aid to Families with Dependent Children benefits after two years and provides a year of transitional benefits - child care, transportation and medical assistance. Recipients must start work within 90 days of their locality's phasing in the plan's work component.
by CNB