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Tax credit can build better state by DAVE WALLACE SPECIAL TO THE DEMOCRAT-GAZETTE | March 19, 2021 at 3:14 a.m.

Many families in Arkansas are struggling to make ends meet right now. Arkansas lawmakers can help hardworking Arkansas families weather the current pandemic--and build the foundation for a solid future--by passing Senate Bill 10. I recently filed this bill, because I believe that Arkansas should join the 29 other states and adopt a state Earned Income Tax Credit (EITC).

State EITCs are modeled after the federal credit. The bottom line is that they work--on a number of levels. They are a proven way to help workers afford basic necessities, like home or car repairs, so they can continue to work and provide for their families. Multiple studies and sources show that the tax credit dollars are spent locally, and supporting local businesses helps grow a community's economy.

But perhaps the most compelling reason to support a state-level EITC is that it helps parents provide basic necessities for their children, including medical expenses not covered by insurance, after-school tutoring for a child struggling in math class, or enhanced broadband services that have been so critical during the covid-19 pandemic.

Want proof? A 2015 article by the Center of Budget and Policy Priorities stated unequivocally that the EITC improves birth outcomes for new moms and reduces behavioral problems for young kids. Children whose families receive the state and federal EITC score higher on math and reading tests and end up more likely to finish high school and enroll in college. That leg up helps build a ladder to reach better career opportunities, as well as boosting lifetime earnings, and helping whole generations of families climb out of poverty. Over time, that extra work and income reduce poverty, which means people are less reliant on public assistance. That saves the state money in the long run, while also allowing people to succeed.

It's important to know that only people who work--and pay taxes--are eligible for the EITC. It's laser-targeted at working-class Arkansans; no one making more than about $56,000 can claim it. It's not a handout--more than half of those who claim the credit only do so for two years or less. It's a temporary safety net to help them until they can work their way up the income ladder.

Under this bill, working people will receive a credit based on a percentage of their federal credit. That could help nearly 300,000 families--including almost 400,000 children--in Arkansas get back on their feet. In addition, nearly $80 million would flow back into local economies across the state. Those are real numbers.

Here's a real story. Kassandra lives in Springdale. She has one beautiful daughter, who is 4 years old. Kassandra works as a teacher at a day care in Farmington. She loves her job, and her students love her. She chose this profession because she has always known that she could make a difference in the life of a young child.

Currently, she and her daughter live with family. She would like to create a home of her own, and an extra $300 would help her put a deposit down on an apartment. In addition, she would like to go to college and start a day care of her own. She works hard. She has ambition. And she just needs the Arkansas Legislature to make an investment in her.

The credit is straightforward and directly benefits the Arkansans who get up early, work late, and support their families.

Arkansas has done a good job of keeping the economy open while maintaining public health and safety measures during the pandemic. That's why our unemployment rate is one of the lowest of any state. But we know workers aren't out of the woods; they're struggling to pay their bills right now, despite their best efforts.

For our state to continue to prosper and thrive economically, every one of us needs a full shot at the American Dream. I encourage you to contact your legislator if, like me, you believe that it's time to help our own and build a better Arkansas.

State Sen. Dave Wallace represents District 22.


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