Panel mulls expanded Earned Income Tax Credit, affordable housing

EITC might go to young adults, immigrant workers

State Sen. Heather Steans speaks in support of a bill she’s sponsoring to expand the Earned Income Tax Credit in Illinois. (One Illinois/Ted Cox)

State Sen. Heather Steans speaks in support of a bill she’s sponsoring to expand the Earned Income Tax Credit in Illinois. (One Illinois/Ted Cox)

By Ted Cox

CHICAGO — An array of community groups, unions, and consumer watchdogs pushed Wednesday for expansion of affordable housing and the Earned Income Tax Credit before a legislative hearing held at the Bilandic Building in Chicago.

“The Earned Income Tax Credit is one of the country’s most effective anti-poverty tools,” said state Rep. Emanuel Chris Welch of Westchester, House sponsor of an expansion bill, in a meeting of the Revenue & Finance Committee.

At an earlier news conference across the street at the Thompson Center, state Sen. Heather Steans of Chicago, the Senate sponsor, touted the EITC’s “very broad bipartisan support.” She said the bill to expand the tax credit would extend it to young, single adults, age 18 through 24, at a cost of $10 million in the first year. Then it would hike the Illinois matching rate against the federal program from the current 18 percent to 19 percent next year, then 20 percent after that, at a total cost of $91 million.

David Harris, director of the illinois Department of Revenue, backed the program, saying it provided tax rebates to 881,000 state taxpayers last year, with 1.1 million children and dependents. The program’s expansion, including opening it to eligible workers who are not U.S. citizens and do not have Social Security cards — instead working under government-issued Individual Taxpayer Identification Numbers — would affect an additional 200,000 households with 180,000 children and dependents. He added that 21,000 Illinoisans filed for the federal program last year, but not the state’s matching plan, “leaving money on the table.”

Harris said, “We know that the Earned Income Tax Credit is one of the best tools available to fight poverty, to lift up working families and create a stronger economy for everyone.”

Harris, who worked under President Reagan, cited how Reagan enacted the program in 1986 and said it’s been “expanded by virtually every president since then because it is a policy program that works.”

The EITC grew out of a concept advanced by conservative University of Chicago economist Milton Friedman for what he called a “negative income tax,” and it basically gives qualifying taxpayers a rebate on taxes paid when they file their returns. Advocates have stressed that the money goes immediately back into the economy by giving it to working families, who spend it on vitals they otherwise couldn't afford.

“This is money spent in the communities, strengthening the backbone of our country,” Harris said.

Amber Wilson, a single mom affiliated with Economic Security for Illinois and the larger umbrella group the Illinois Cost of Living Refund Coalition, said she knows from personal experience how to “make a tax return stretch literally over the course of months as a means of survival.”

Lisa Christensen Gee, of the Institute on Taxation and Economic Policy, testified before the committee hearing, calling it “a true economic stimulus” because of the “additional multiplier effects” achieved in spending of the tax rebates. She said current EITC refunds range from $100 to $1,200 and she advocated expansion of the program.

Lisa Christensen Gee, of the Institute on Taxation and Economic Policy, calls the EITC “a true economic stimulus” because of the “additional multiplier effects.” (One Illinois/Ted Cox)

Lisa Christensen Gee, of the Institute on Taxation and Economic Policy, calls the EITC “a true economic stimulus” because of the “additional multiplier effects.” (One Illinois/Ted Cox)

“I know the governor is a big proponent of this legislation,” said state Rep. Michael Zalewski of Riverside, committee chairman. “This is something we’re going to be mindful of.”

The committee also heard testimony on a couple of different proposals to bolster affordable housing statewide. State Rep. Delia Ramirez of Chicago spoke on her bill calling for the state to adopt an affordable-housing tax credit likewise building on a federal program that’s already in place.

“Affordable housing is an important investment in Illinois’s future,” she said.

Rachel Rhodes of the Chicago-based National Equity Fund said the Illinois program “piggybacks on a very, very efficient federal credit.”

Allison Clements, executive director of the Illinois Housing Council, said the tax credits go to developers pledging a 30-year commitment to making their buildings affordable, serving to spur development. She said the 10-year proposal for a state program would cost $35 million a year, but also provide 3,500 new homes a year.

Earlier, Bob Palmer, policy director of Housing Action Illinois, testified on a program to provide developers and realtors a break on their property-tax assessments in exchange for committing to affordable housing. “The state faces an immense need for affordable housing,” he said, citing figures released this week finding that the state has just 36 affordable units for every 100 extremely low-income renters, a shortage that has caused 71 percent of the state’s poorest renters to be ranked as “severely housing cost-burdened,” meaning they spend more than half of their income on housing.

Palmer testified that the program would spur just not development, but renovation of existing apartment buildings by extending the assessment reductions to landlords who upgrade their buildings while committing to making the units affordable.

Zalewski signaled his support for the proposals, concluding the session by saying, “It’s a whole new day for affordable housing.”