Testimony by Ali Mickelson in Support of Senate Bill 13-001
Madam Chairman, members of the Committee:
My name is Ali Mickelson, and I am the Tax Policy Attorney at the Colorado Fiscal Institute.
The Colorado Fiscal Institute is a nonprofit, nonpartisan organization that provides credible, independent and accessible information and analysis of fiscal and economic issues facing Colorado.
I am here today to testify in support of Senate Bill 1– The Working Family Economic Opportunity Act of 2013.
While the state budget is starting to see growth and economic recovery, working families in Colorado are still struggling. Today you have a historic opportunity. It is not often that economic, political and fiscal circumstances come together in a way that creates a perfect opportunity to adopt policy that is proven to improve the lives of so many working families. Today you can implement tax policy that benefits 400,000 Colorado families and you can do it in a way that is efficient,
effective and affordable.
As you heard from both the individuals who benefit from working family tax credits and from the tax professionals that prepare their returns, the federal earned income tax credit, or EITC and Child Tax Credit make a huge impact in the lives of working Coloradans. Increasing a family’s paycheck is the single most effective way to create stability within families and opportunities for children.
Credits like the EITC and the Child Tax Credit put money back into the pockets of working families. As you heard, this has been proven to increase the educational outcomes, health outcomes, and lifetime achievement of children. Increasing a family with young children’s income by just $1,000 increases academic achievement, math and reading scores, and overall likelihood a child will go to college. Adding $3,000, an amount that is possible when a state credit is added to the federal credits, equates to working more hours and earning 17 percent more as an adult. Recently, we learned that Colorado has the second fastest growing rate of childhood poverty. Let’s change that trend and let’s change how Colorado supports our children. Passing Senate Bill 1 will not only lift Colorado children out of poverty, but it will increase their potential for success over their entire lifetime.
You heard from Economist Chris Stiffler that this bill is not only good for Colorado families; it is good for local communities and our economy. Working family tax credits put money in the pockets of people who spend it. Additionally, the EITC and Child Tax Credit incentivize work and allow people to move off of public support and into the work force. These credits actually raise employment rates, especially among single mothers and low-income workers.
Furthermore, the EITC is the number one most effective program at reducing poverty rates. In 2011, the EITC and the Child Tax Credit alone reduced the national poverty rate by 2.8 percentage points. The childhood poverty rate would have been 6.3 percentage points higher without the EITC and the Child Tax Credit during this time. Colorado needs new tools to combat growing child poverty and SB 1 is a tried and true approach.
On top of all of that, these credits are easy to implement and administer, without dramatically increasing the size of government. States with EITCs spend very little on the administrative costs of the credit — typically less than 1 percent. That means that nearly every dollar a state spends on these credits goes directly to working families to help them meet basic needs.
Madame Chairman, I have spent many hours testifying about tax credits and their effectiveness. Most often I am arguing against additional tax credits because there is no evidence that the credit accomplishes its objective other than the testimony of those receiving the credit. Today is different. Not only have you heard how the credit helps recipients, you have also heard the results of rigorous, long-term research and analysis that proves that EITC and Child Tax Credit accomplish targeted objectives with amazing results.
Former President Ronald Reagan described the EITC program as “the best antipoverty, the best pro-family, the best job creation measure to come out of Congress.” Senate Bill 1 builds on this success in Colorado. The tax credits in Senate Bill 1 are efficient and effective. The policy has been widely researched, tested and proven to create meaningful outcomes for low- and middle-income families. We encourage you to support 400,000 Colorado families, including families in all of your districts, and across the state. Senate Bill 1 is good policy and it is good for Colorado. Now is the time to seize this opportunity and put Colorado families and Colorado’s future on a path to success.
Thank you Madam Chair.
CONTACT INFORMATION:
Ali Mickelson, Esq.
Tax Policy Attorney
Colorado Fiscal Institute,
1905 Sherman St., Suite 225, Denver, CO 80203
720-379-3019 x 222
mickelson@coloradofiscal.org
