More than 18,000 Hall County families would benefit from a state-level tax credit that supports low-income workers, according to research from the Georgia Budget and Policy Institute, infusing about $4.3 million into the local economy.
Representatives from the Atlanta-based research firm gathered Friday with local nonprofit and business leaders, as well as state lawmakers and candidates for office, at the North Georgia Community Foundation in Gainesville to advise about the earned income tax credit.
The tax credit is meant to incentivize work, GBPI Research Director Wesley Tharpe said, by supporting parents with dependent children.
Twenty-six states and the District of Columbia offer their own EITCs, which are modeled on a similar federal credit.
The GBPI reports about 1.1 million Georgia households, or 28 percent of all state income tax filers, received the federal EITC in 2013. Families making between $10,000 to $23,000 annually received the largest EITC value, and the average federal credit for Georgia recipients was $2,700 in 2013, the GBPI reports.
The value of the credit rises and falls based on income earned and can spill over into a refund for some families.
For example, a single mother with one child earning minimum wage and taking home about $14,500 a year receives a federal tax credit worth $3,359, according to the GBPI.
A married couple with two kids earning about $29,000 in annual income receives a tax credit worth about $4,400, which offsets their tax bill and provides about a $3,500 refund.
And for a couple with three children earning about $40,000 a year, who are considered to be nearing the middle class, the tax credit is worth $2,794.
Between 20 and 30 percent of Hall County tax filers receive the federal tax credit, which is worth about $48 million, according to the most recent available data from 2013.
Tharpe said a matching state tax credit, perhaps 5 or 10 percent of the federal total, would likely impact many workers and families in Gainesville, where about 28 percent of residents live below the poverty level compared with a statewide average of just 17.4 percent.
The median household income is slightly above $40,000 in Gainesville, while the statewide average is above $49,600.
Advocates of a state-level EITC believe it will help families afford basic necessities and begin making investments in homes and other assets that can pave the way to the middle class. The “bottom-up tax cut” could also boost local economies.
A state-level credit would come with a price tag, however. Tharpe estimates that a 10 percent match would cost Georgia about $300 million in lost revenue.
The GBPI is urging lawmakers to consider the tax credit as part of a broader reform package as Republican lawmakers look to lower income tax rates, and note that moving people into higher income brackets can help offset spending in other public assistance programs.