President Barack Obama proposed an expansion of the Earned Income Tax Credit (EITC) in his budget last week. The amendment would double the maximum credit for taxpayers with no qualifying children, raise the qualifying income amount, and lower the eligible age from 25 to 21 years old.
The recommendation targets low-income students and encourages more single adults to enter the workforce. An approximate 5.8 million people would be newly qualified for the EITC, and 7.7 million people would benefit from the increased maximum credit. The proposal intends to help those caught in poverty on a larger scale than current legislation.
Obama also supports a bill for minimum wage to increase from $7.25 to $10.10, in tandem with the EITC expansion. Neither one is likely to pass within the next year, but the discussion of poverty as a legislative issue may bring action into the foreseeable future.
The maximum EITC for 2013 taxes:
To see if you qualify for the EITC, visit:
Read more about it here.
Sequestration has been a confusing topic lately with the top questions being: ‘Do I even need to pay attention to this?’ and ‘Is there going to be any real impact to me?’. With all of the talk of the fiscal cliff fizzling out, people are suggesting this is all political hype and that Congress is shouting ‘Wolf!’ one too many times. However, some of the very real impact of the sequestration is starting to hit home, particularly on state funded education programs. One of our interns, Jasmine Cook, is a student at the University of Maryland and we invited her to write about her personal experience with how the sequestration is affecting her.
Growing up in the Prince George’s County Public School System, the topic of budget cuts is by no means foreign. At the prime age of nine, I attended a school board meeting to defend against the disbandment of the Talented and Gifted Program (TAG), of which I was currently enrolled. My view was limited at the time, but it was only my first of many tense encounters of financial stalemate. In eighth grade, the orchestra was cut and I traded in my violin for a French horn; the façade of any influence over the system disappeared and adaptation became crucial. In high school, two out of the three academic programs stopped allowing students to enroll from neighboring districts, in order to cut transportation costs. Students feared displacement and teachers experienced layoffs; the Russian program was diminished to what was assumed to be eventual termination. However, it was public school. No tuition fees meant little to no say, and the realization both angered and jaded my fellow students.
The New Markets Tax Credit (“NMTC”), under IRC §45D, was created as part of the Community Renewal Tax Relief Act of 2000. This act encouraged qualified equity investments (“QEIs”) in community development entities (“CDEs”) directed towards low-income communities. President Obama recently extended the NMTC in January of 2013 as a part of the American Taxpayer Relief Act of 2012. The NMTC rewards investors with a 39% tax credit of the total QEI, which is split over a seven year period. There is also additional return to investors who make a low-return project viable.
The CDEs also benefit with a 25% reduced cost of borrowing and lower interest rates than could otherwise be attained. Programs must apply to become CDEs; awards totaling up to 3.5 billion are announced annually. The stimulated investments lead to job and material improvement in the residents of struggling communities. Many CDEs serve as intermediaries for providing loans and investments in low income areas, which lead to increased economic activity.
To qualify as a CDE, the program must be located in a distressed community which displays at least one of the following characteristics: