ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Wednesday, December 18, 1996 TAG: 9612180077
SECTION: EDITORIAL PAGE: A-18 EDITION: METRO
VIRGINIA is giving great attention to moving recipients of Aid to Families With Dependent Children from welfare to work. But precious little is being done about the increasing difficulties of a much larger population: the working poor. Indeed, of the 800,000 Virginians with incomes low enough to qualify them for food stamps, fuel assistance and medical benefits, fewer than 10 percent receive AFDC.
Today in Richmond, a General Assembly committee will hold hearings on a proposed state earned-income tax credit for low-income Virginians. Such a credit would be an easy-to-administer, nonbureaucratic and cost-effective way to deliver a modicum of relief and reward to hard-pressed working families.
The idea has been around at least since Lt. Gov. Don Beyer's poverty commission proposed it several years ago. So far, however, it has gone nowhere.
The bill to be considered today by the House Finance Committee was introduced in the 1996 General Assembly session but carried over until the session to convene next month. It would grant low-income working Virginians a credit on their state income taxes of 10 percent of the earned-income credit they claim on their federal taxes.
By piggybacking on the federal system, the Virginia proposal would keep administrative costs to virtually nil. Almost all the estimated $50 million annual cost to the state would go directly to those for whom the credit is intended; most of the money would re-enter the state economy.
The proposal has the added advantage of being fair. The burden of state and local taxes in Virginia is, on average, relatively low. But the working poor pay a disproportionate share of it.
Virginia imposes its regressive sales tax on food, a harm to the poor that the General Assembly needs to end. In addition, the state income tax - otherwise mildly progressive - kicks in low on the income ladder. The poverty line for a parent and two children is an annual income of $12,320; the state income-tax threshold for such a family is $5,400. For a two-parent, two-child family, the poverty line is $14,800; the state income tax kicks in at $8,500.
This is despite the fact that, in Virginia as in the rest of the America, work is no longer a guarantor against poverty. In the late 1960s, a full-time job at minimum wage could keep a family of three out of poverty; nearly three decades later, it could provide only 70 percent of the income to keep the family out of poverty.
The failure of many jobs in today's economy to provide an above-poverty income, researchers say, is a key culprit in the growth of the number of children in poverty. According to one recent estimate, nearly 17 percent of Virginia children aged 6 and younger live in poverty families.
Nationally, the earned-income tax credit is supported by politicians and policy wonks of varied ideological persuasions. Because it targets low-income people, liberals tend to like it. Because it rewards work and does not require an extensive new bureaucracy to administer, many conservatives like it as well.
The same virtues apply to a credit at the state level, especially in a state with as regressive a tax system as Virginia's. The 1997 General Assembly should give tax relief to the working poor. If anyone deserves it, they do.
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