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Mississippi Auditor Endorses State Earned Income Tax Credit

The tax credit would give an incentive for people to enter into the workforce by supplementing their wages with a break on income tax, a credit that would eventually go away as the worker makes more money and stays in the workforce longer.

(TNS) — Mississippi State Auditor Shad White on Monday said he generally supports the idea of a state earned income tax credit, which would give low- to moderate-income earners a tax break when they enter the state workforce.

"Economists have agreed that this one intervention is one of the most powerful interventions," White, a Republican, said at the Stennis Capitol Press Forum.

The general idea of an earned income tax credit is to give people an incentive to enter into the workforce by supplementing their wages with a break on the income tax. As the person makes more money and stays in the workforce longer, the tax credit would eventually go away.

The federal government already has an earned income tax credit. Thirty-one states plus the District of Columbia have gone further and offered some version of an earned income tax credit on state taxes, according to the National Conference of State Legislatures and the Internal Revenue Services.

The NCSL's website states that Arkansas and North Dakota also created a temporary income tax credit. Missouri and Washington have both enacted tax credit laws that will take effect in 2023. South Carolina enacted a phase-in system that's supposed to go fully into effect in 2023.

The Congressional Research Service in 2018 published an analysis of the federal earned income tax credit, which concluded that the credit accomplished many of federal lawmakers' goals of of reducing poverty among families with children.

"Evidence also suggests that the credit may improve health and education outcomes of low-income populations," the report reads.

The same analysis, however, concluded that some research shows that the credit exacerbates "inequities in the tax code between taxpayers with and without children."

Mississippi has one of the lowest labor force participation rates in the country. White contends that the tax credit could be a way to encourage people to enter the workforce, improve poverty levels and bolster the state's abysmal labor participation rate.

"The concept is simple: Give (people) a tax cut to get them off the sidelines," White said.

(c)2022 the Northeast Mississippi Daily Journal (Tupelo, Miss.) Distributed by Tribune Content Agency, LLC.
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