February 4, 2005

State legislature is working on tax credits
and medical benefits for low-income families

By Brigid Curtis Ayer

The Indiana General Assembly is considering several bills this year that would help low-income families lower their state taxes and provide medical benefits for them.

The Indiana Catholic Conference is tracking legislation such as the Earned Income Tax Credit ( EITC), House Bill 1083, a bipartisan effort authored by Rep. Michael B. Murphy, R-Indianapolis and Rep. John Day, D-Indianapolis.

The bill would provide qualifying households with a tax credit, thus allowing a wage-earner who heads a household to retain more of his or her earnings by lowering their tax liabilities. The bill passed out of the House Ways and Means Committee by a 22-0, bipartisan vote. The measure passed the full House in a 97-0 vote. Rep. Shelia Johnston Klinker, D-Lafayette, and Rep. Cindy Noe, R-Indianapolis, are also co-authors of the bill. Sen. Ron Alting, R-Lafayette, is the Senate sponsor who will help move the bill along in the Senate. Sen. Howard “Luke” Kenley, R-Noblesville, and Sen. Vi Simpson, D-Bloomington, are also Senate co-sponsors of the bill.

The Earned Income Tax Credit began as a federal program during the 1970s and several states have created their own version of it. Indiana’s credit is 6 percent of the federal credit.

Day, a member of Holy Cross Parish in Indianapolis, said Indiana’s state Earned Income Tax Credit program was to expire at the end of this year, but the bill currently before the legislature would make the tax credit permanent. The state credit benefits families or single persons earning $33,000 or less a year.

“Families with children benefit the most from this proposal,” Day said. “The lower the [family] income the higher the tax rebates.”

For example, Day said a single mother with two children making $15,000 annually would be eligible for a $236 state tax credit in addition to a federal tax credit of nearly $4,000.

“I appreciate Rep. Mike Murphy’s leadership role on this important issue, which will bring tax relief to over 400,000 moderate- and low-income working families in Indiana,” said Day. “It brings a greater amount of fairness to the tax code. It rewards working families.”

Day said he would like to see Indiana’s earned income credit raised from 6 percent to at least 8 percent and as much as 10 percent of the federal credit if the state revenue forecast improves.

Day said many people do not take advantage of the credit because they are unaware it is available.

To apply or learn more about Indiana’s Earned Income Tax Credit, call the Indiana Department of Revenue Taxpayer Services at 317-232-2240 and press option 5. For more information on the Federal Earned Income Tax Credit, call the IRS hotline at 800-829-1040 or check out the IRS website at www.irs.com.

Another issue of concern to Hoosier families and children that the Indiana Catholic Conference is watching are possible changes in benefits to Medicaid recipients. Medicaid acts as a safety net providing health and medical benefits to low income families, the elderly and the disabled.

In a public forum at the Statehouse on Jan. 25, legislators heard testimony from families who may be affected by possible benefit changes in the future. The state’s Medicaid program is being eyed along with many other state programs and services as a possible area to cut to get the state back on its feet fiscally. While Gov. Mitch Daniels expects to make changes in services, which benefits will be changed is unclear.

“The Medicaid cuts which will likely be spelled out in the state’s budget bill, HB 1001, are unclear at this point,” said Day.

“I don’t think we can make an across-the-board generalization of which services can be cut, but need to look at it on a case-by-case basis before we make any cuts,” Day said. “In areas where there is wide agreement that the program is successful and where there are waiting lists, we ought not to cut.”

Rep. Don Lehe, R-Lafayette, a parishioner at St. Ann Parish in Lafayette, Ind., said, “There are several bills this session which are important to make state government, more efficient and responsive to citizens’ needs.

“Some of this legislation will also eliminate some of the problems of past mismanagement and waste,” said Lehe. “HB 1001 [the state’s budget bill] mentions Medicaid, but it does not necessarily mean there will be cuts. I think the purpose is to slow down growth in costs for a while until the state budget can be balanced.”

To learn more about the positions of the Church on a particular issue or public policy matter, check out the Indiana Catholic Conference’s web page for policy statements and position papers at www.indianacc.org.

The ICC web page has links to the United States Catholic Conference, other state Catholic conferences and the Indiana General Assembly among other important links to interested Catholics.

To become part of the Indiana Catholic Conference’s action network, (The I-CAN Network) e-mail the ICC directly at icc@indianacc.org for more information.

(Brigid Curtis Ayer is a correspondent for The Criterion.)


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