EARNED-INCOME CREDIT IS NEW WELFARE ATTEMPT

Bills prefiled in both houses of the Legislature would create a state earned-income tax credit that backers say is needed to benefit Missouri's working poor. Key supporters include officials of the AFL-CIO, the Service Employees International Union and the Missouri Catholic Conference.

A tax credit differs from a deduction in that credits are absolute reductions in the amount of tax owed after the tax obligation is computed. The proposed legislation would create a state EITC set at 20 percent of the federal EITC. A family with two or more children and a household income of under $30,580 would qualify for a tax refund of up to $763.

Have backers of this proposal given any thought to an across-the-board tax cut for all working Missourians?

"Give" is apparently very much the operative word. As explained by supporters, an EITC would operate pretty much as a gift akin to welfare. For a low wage earner who qualified for the EITC, the check coming from the government would in many cases exceed the total tax liability of that person. In other words, that wage-earner would have an EITC check coming back from the government, even if he or she weren't entitled to a tax refund.

Once you understand this, it is perhaps easier to see this EITC proposal for what it is: a straightforward, no-bones-about-it scheme to redistribute wealth. It should be discussed and debated as such. It is also worth noting that this EITC proposal is championed by many of the same folks who brought you Gov. Mel Carnahan's higher taxes passed during his first year in office. (You will recall that these were the tax increases Gov. Carnahan promised to let the public vote on a chance we never got.) Having sharply raised taxes on Missouri's most productive earners, they now propose to send money to those at the low end of the wage scale, even exceeding whatever taxes these people owe. Missourians might be forgiven for wondering exactly how this EITC proposal differs from a welfare check.

Ah, but these are the working poor, we're told. This may be, but from food stamps to help with utility bills, there exist all kinds of programs to help folks at the low end of the wage scale. It is time to lighten the burden on Missouri's most productive citizens.

As argued here before, the tax proposal we'd like to see debated this year is repeal of the higher Carnahan taxes. That one isn't on the radar screen.

It should also be understood that the EITC proposal plays an important role in statewide Democratic politics. With Big Labor a vital pillar of the Democratic coalition, such a redistributive plan has lots to commend it when it comes to lining up crucial support for a run for statewide office. There's certainly nothing sinister about this, but it is mentioned here for full disclosure.

The measure would be an expensive one for state government, with an estimated annual outlay far in excess of $100 million. Supporters say they're willing to consider phasing it in over several years to minimize its fiscal impact.

Rather than passing this EITC in any form, how about getting busy and repealing the Carnahan tax increases? With state revenue coffers overflowing as never before, surely the state can afford it, even perhaps going to the extreme of reintroducing a revolutionary concept known as economy in government. Again, how about across-the-board tax relief for all working Missourians? Now those are causes worth fighting for.