Over the last 20 years, West Virginia has made substantial progress in reducing the state income taxes paid by families living in poverty. In 1990, the state income tax threshold (the point at which residents begin to pay state income taxes) on families of four living at the federal poverty line was $8,000 compared to $22,400 in 2011. In 1994, a family of four living at the poverty line paid about $250 in state income taxes compared to $151 today.
In spite of this progress, West Virginia still taxes working-poor families deeper into poverty than most states. According to the new report by Center on Budget and Policy Priorities, West Virginia is one of 15 states that impose state income taxes on two-parent families of four at or below the poverty line.
As readers of this blog know, we’ve been advocating a solution to this problem for about four years. It is called a state Earned Income Tax Credit (SEITC). In conjunction with the federal EITC, a West Virginia SEITC would serve as an effective anti-poverty tool. By giving many low- and moderate-income working families a refundable credit, a SEITC would promote greater economic security and would help these families make ends meet.
Currently, 24 states have enacted SEITCs. West Virginia should follow their lead. By reducing state income taxes for the working-poor in West Virginia it will both encourage works and reduce poverty, while setting families – and our state economy – on the path towards a better tomorrow.
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