This is a Great Idea

Newly elected state legislator, Doug McKillip, is on to something. At the urging of Athens mayor, Heidi Davison, McKillip has prefiled legislation that would extend the Federal Earned Income tax Credit to Georgia's state income tax. In other words, the poorest Georgians, many of who work, would get a break on their state income tax.

While this will not quite as McKillip suggests, lift Georgians out of poverty, it is a step in the right direction in a state where, according to the nonpartisan Georgia Budget and Policy Institute, the poorest fifth of families pay 12 percent of their income in state and local sales, income and property taxes. The middle fifth pays 10 percent, and the wealthiest 1 percent pay 7.5 percent. Georgia has one of the most regressive tax codes in the nation, and since Republicans are intent on addressing it this session, McKillip has done us all a great service by helping to frame the debate and offering legislation that just makes good sound economic sense.
Here's the article:

Bill would extend tax credits (Athens Banner Herald)
Pre-filed legislation
By Blake Aued blake.aued@onlineathens.com Story updated at 12:49 AM on Saturday, December 9, 2006
Poor workers would get a break on their state income taxes under a bill proposed by newly elected state Rep. Doug McKillip, D-Athens.
McKillip pre-filed a bill last week that would extend the federal Earned Income Tax Credit to state income taxes. The bill will be considered when the Georgia General Assembly convenes in January.
"If you're a working guy making $10 an hour, $20,000 a year, trying to raise a family of four, this puts about 215 bucks in your pocket," McKillip said. "It's going the take somebody and raise them out of poverty."
According to the nonpartisan Georgia Budget and Policy Institute, 771,000 of Georgia's 3.5 million taxpayers made an Earned Income Tax Credit claim averaging about $1,900 in 2002. In 2004, the maximum benefit was $4,300.
The state credit would be equal to 5 percent of the federal credit.
"This is just another boost for those individuals who are in a certain income bracket to put some of their money back in their pockets," said Athens-Clarke Mayor Heidi Davison, who asked McKillip to introduce the bill.
"Our (state legislators) need to help in our poverty efforts," Davison said. "This is a good way for them to do that."
The credit would be especially welcome in Athens, which has a 28 percent poverty rate and a median income of about $28,000 a year, according to the U.S. Census Bureau. Sixty-five percent of Athenians living in poverty are working, according to Partners for a Prosperous Athens.
It would dovetail with Athens Housing Authority efforts to get more low-income workers to take advantage of the federal credit, Davison said. AHA officials began a program in the Rocksprings Home public housing project, where many of the poorest Athenians live, to encourage residents to claim the EITC. They hope to sign up 250 people next year for federal credits topping $1 million, she said.
The tax credit also would help reverse the regressive nature of state and local taxes in Georgia, according to budget and policy institute. The poorest fifth of families pay 12 percent of their income in state and local sales, income and property taxes. The middle fifth pays 10 percent, and the wealthiest 1 percent pay 7.5 percent.
Other advantages are that the Earned Income Tax Credit is tied to inflation and provides an incentive to work, according to institute.
The tax credit would cost the state between $60 million and $70 million, according to the GBPI. The state's total tax revenue in fiscal 2006 was $16.2 billion. The cost will be offset by the tendency of poor people to spend, rather than save, tax refunds, McKillip said.
"Most of these people are going to put the money right back into the economy," he said.
Democratic leaders in the state House of Representatives, where all revenue bills must originate, already have signed off on the tax credit, McKillip said. The freshman lawmaker said he also plans on approaching moderate Republicans for support, and selling them on the idea as a possible stepping stone to eliminating all state income taxes.
GOP leaders have listed as a goal for the next two years abolishing the state income tax and either replacing it with a sales tax or cutting services.

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