Earned income tax credit finally coming to Utah's working poor?

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Poor working Utahns finally would qualify for a state earned income tax credit (EITC) to make it worth their while to avoid assistance programs and work under a bill passed Tuesday by the House.

Representatives voted 61-7 for HB294 and sent it to the Senate.

"Twenty thousand families in Utah would be helped," said Rep. John Westwood, R-Cedar City, the sponsor of the bill. "This is an opportunity to help those who are trying to help themselves by working."

The EITC is designed to encourage people to leave public assistance programs to work. Without it, some people who work at low wages figure they would actually do better financially not to have a job and stay on assistance.

The federal government provides such credits as do 26 states. They can help people receive tax "refunds" even when they earn so little that they may not owe any income taxes.

A state EITC has been proposed in Utah several times in recent years, but it has been rejected either for costing the state too much or not providing significant relief to the poor — essentially for being too big or too small.

Westwood said the bill strikes a proper balance.

Past proposals would have cost the state an estimated $25 million a year, he said. HB294 would cost one fifth of that — an estimated $4.8 million. That is because it would limit the credit to those now stuck in intergenerational poverty, as determined by the Utah Department of Workforce Services. Experts say that is the highest-risk population for continuing poverty and the toughest to help move out of it.

With such focus, the bill would be able to offer a tax credit amounting to 10 percent of the federal EITC. Previous proposals were for only 5 percent, or just $120 on average, which critics said wasn't enough to truly help someone get off assistance.

In an earlier hearing, Bill Cosgrove, representing the American Academy of Pediatrics, said the working poor who come out of intergenerational poverty "are always near the cliff. Not only are they working paycheck to paycheck but dollar to dollar. A small difference makes a big difference for these folks."