The economic downturn of 2015 hit the 2016 Oklahoma budget hard. We faced hundreds of millions in revenue shortfalls. Those of us in the Legislature at the time, and particularly those of us on the budget team, faced some very difficult choices.
In the end, it came down to funding large, widely used programs like schools and Medicaid, over smaller programs like Oklahoma’s Earned Income Tax Credit.
I reluctantly ran the bill that stopped the refundability of the EITC, along with its budget, which effectively killed the EITC.
In my time in the Legislature, several of us advocated for evidence-based policies, like the EITC. So, the irony of losing this program was not lost on me.
The refundability of the program is the key to its success. Workers get a refund on their taxes even if they don’t pay income tax. It is an economic incentive to work.
It has proven successful in motivating people with lower incomes to enter the workforce and not solely rely on welfare programs to try and get by.
In Oklahoma, ending the refundability of the EITC hit over 200,000 families. Eligible married families with two children lost $264 per year. Single parents with two children lost $231 per year. That’s grocery money, or rent or gas for the car.
The success of the EITC has been well validated. Just last year, the nonpartisan Congressional Budget Office showed many proven benefits of the EITC. Even the conservative, mainstream editorial magazine National Review touted its benefits as recently as 2015. It has been championed by no less a luminary than Milton Friedman, the Nobel Prize-winning, free-market economist.
Although the EITC is not without its problems, (i.e. fraud), so are other government programs that trumpet their good intentions. But in the case of the EITC, its good intentions actually work.
I hope it’s not too late in this legislative session to put the EITC back into the budget. But if not, I would encourage the Legislature and the governor, going forward, to reinstate this effective, evidence-based incentive to help our fellow working Oklahomans.
Mark McCullough, a Republican legislator 2006-16, lives in Sapulpa.