With the April 15 federal income tax deadline looming, now is the time to remind Louisiana filers about the federal Earned Income Tax Credit (EITC). Started by Congress in 1975, this little-known federal program is designed to lift the working poor. The problem? People don't know about it. That's why we need our leaders to shout out the good news, especially during tough times.
This year, the tax credit is worth up to $3,888 for workers who earned less than $32,121 in 2001 while raising two children, according to Peter Dangerfield, executive director of the nonprofit Total Community Action Inc. Workers who earned less than $28,281 in 2001 while raising one child can get an EITC refund of up to $2,353 for last year. Tax filers with no children who earned less than $10,710 can get a federal refund check of up to $353. Louisiana's per capita income is $17,000.
"A vast majority of Louisiana taxpayers are in those kinds of income brackets," says UNO economist Tim Ryan. "The problem is that many people don't know about it ... so they leave money on the table."
State Treasurer John Kennedy, a candidate for governor, estimates that several hundred thousand people in Louisiana are entitled to an EITC check -- but they aren't taking advantage of it. Kennedy, who has promoted a program to help Louisiana residents retrieve more than $62 million in unclaimed property such as forgotten utility deposits, says the EITC represents a much larger potential windfall. "The biggest area that stands to gain is New Orleans," he says. "A total of 66,808 people or 36 percent of the tax filers in Orleans Parish can retrieve an average refund of $2,010 from the EITC."
A 2001 study by The Brookings Institution found that our city was the highest of 27 EITC cities surveyed, and "communities located outside of New Orleans also had high concentrations of working poor families." In Jefferson Parish, 20 percent of the taxpayers -- 41,000 families -- earned the credit. In the Westwego/Avondale area of the West Bank, more than one-third of those families earned the tax credit. On the Northshore, the EITC boosted the household incomes of more than 12,000 residents of St. Tammany Parish.
A 1998 UNO study of the tax credit noted that tens of thousands of people failed to take advantage of the refund program in the eight-parish metro area of Orleans, Jefferson, Plaquemines, St. Tammany, St. Bernard, St. Charles, St. James and St. John the Baptist parishes. "There was $351 million left on the table in 1998," Ryan says of the metro area. Of that amount, $82 million was left in New Orleans alone. A total of 44,000 people eligible for EITC did not take advantage of the program.
The money is there for the taking. Publicizing EITC is an imperative. The Sewerage & Water Board has included an insert on the EITC in customer billings. The IRS promotes the program, along with businesses and governmental groups. Those efforts help, but nobody commands public attention like a governor or a mayor -- as in Chicago, where Mayor Richard M. Daley kicked off a public awareness campaign in 2000.
As a businessman, Nagin should recognize this opportunity. He's still relatively new to his office, so we'll give him time to hit his stride. But we're perplexed as to why Foster, also a businessman, has dragged his heels for seven years now. "The governor thought it was a good idea and he's willing to help," Foster's deputy press secretary Steve Johnston says. So why hasn't the governor been at the forefront?
It's a fair question. In a letter to Foster dated Sept. 13, 2001, two of Louisiana's biggest employers -- shipyards owner "Boysie" Bollinger and Entergy New Orleans president and CEO Dan Packer -- asked the governor to take a lead role in urging Louisianians to take advantage of the federal tax credit. Eighteen months later, it still hasn't happened. The EITC has not appeared on the governor's Web site or his archived columns and executive orders. And we are told the topic did not come up at the March 26 Governor's Conference on Economic Development.
Filers who miss the April 15 deadline can file amended returns -- and they can file retroactively to recoup refunds from up to three years earlier. So for Gov. Foster, who with nine months left in office is still seeking ways to "grow Louisiana's economy," here's an easy one: take the lead in helping the working people of Louisiana get their federal money off the table.