Patrick IshmaelMichael Austin

THE PROBLEM: State spending is on the rise in Missouri, led by a growth in public welfare dollars. Public welfare spending now accounts for more than 46% of total spending and is the largest driver of general spending growth in Missouri.

THE SOLUTION: Transition toward the Earned Income Tax Credit (EITC).

An EITC is a credit that may be used to offset a worker’s state income tax liability. Proper use of EITCs could slow the growth of public welfare spending while providing material benefits to working families.

WHO ELSE DOES IT? Twenty-five states and the District of Columbia offer EITCs at either the state or local level, although the amounts and refundability of the credits vary.

THE OPPORTUNITY: Moving current public welfare dollars to an EITC will encourage self-reliance among the state’s poor while also restricting growth in public welfare spending. Not only does the EITC help working families make ends meet, but it also encourages recipients and families to find jobs and increase hours worked. Missourians can move up the economic ladder with the aid of the EITC—which can help people get off state assistance entirely, thus bringing down the cost of the credit.

KEY POINTS

  • Aid to our most vulnerable citizens will be better targeted, while still providing the help they need.
  • EITC recipients can build the self-esteem that comes from work.
  • Public money will go toward helping families rise from poverty and escape dependence on government.

SHOW-ME INSTITUTE RESOURCES

Blog Post: Moving Missourians from Welfare to Work

Blog Post: Making Strides toward Welfare Reform

 

For a printable version of this article, click on the link below. You can also view the entire 2018 Missouri Blueprint online.

About the Author

Patrick Ishmael
Director of Government Accountability

Patrick Ishmael is the director of government accountability at the Show-Me Institute.

Michael Austin.JPG
Michael Austin
Policy Analyst
Michael Austin was a Policy Analyst at the Show-Me Institute specializing in state and local budgets, taxes, and economic growth. Michael graduated with a BBA in business management and economics from Washburn University in Topeka, Kansas, and holds an MA with honors in economics from the University of Kansas.