Oregon Center for Public Policy: No Contest: Why Expanding the Earned Income Tax Credit is Better for Working Families and Oregon than the Tax Bracket Increase

Next year, the Oregon Legislative Assembly may face two different income tax measures purporting to help working families.

One plan, proposed by Republicans in the legislature, would double the size of Oregon’s two lowest income tax brackets, doubling the share of income that is taxed at 5 and 7 percent (hereinafter, the “Tax Bracket Increase”).[1] Its supporters claim that under their plan “help goes to those that need it most.”[2]

The other plan, proposed by Oregonians for Working Families, would expand Oregon’s Earned Income Tax Credit (EITC) to 18 percent of the federal EITC.[3] Oregon’s EITC, currently 6 percent of the federal credit, was created in 1997 with strong bipartisan support that recognized the credit’s effectiveness and efficiency in helping working families. Many states have state EITCs, and Oregon’s credit currently stands as one of the nation’s smallest.

Which proposal is better? In a head-to-head matchup, it’s no contest: the EITC expansion is better for working families and for Oregon. The EITC expansion better targets help to low- and moderate-income working families — those most in need— and does so for a fraction of the cost of the Tax Bracket Increase.

Read the Full Report (PDF)

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