Rep. Christina Marie E. Sablan (D-Saipan) has prefiled a bill that would repeal a law in order to provide relief for working families by making them eligible for the Earned Income Tax Credit.
Cosponsored by 10 other House of Representatives lawmakers, H.B. 22-10 would restore the EITC for low-and moderate-income working families in the CNMI.
The bill is among the many legislations that will be introduced during the first regular session of the 22nd House of Representatives tomorrow, Friday, at 2:30pm.
Sablan stated in the bill that EITC is a refundable tax credit in the U.S. Internal Revenue Service Code that helps qualified low- to moderate-income working families and taxpayers get a tax break by allowing them to use the credit to reduce the taxes they owe, and in some cases, increase their tax refunds.
The legislation will repeal Title 4 Section 1709 of the Commonwealth Code, which currently provides that a taxpayer who is owed a tax refund due to “any excessive credit” must pay an additional tax to the Commonwealth that is equal to 100% of the refund.
She said since the enactment of Public Law 11-25 in 1998, low-and middle-income earners of the Commonwealth have been burdened by this 100% tax on refunds for which they would have otherwise qualified.
She said Title 4, Section 1709 of the Commonwealth Code could further be misconstrued to prohibit the CNMI from issuing other refundable tax credits in the IRS Code not limited to the EITC.
Sablan said the EITC is a proven and effective tool to fight poverty and lift household incomes because it encourages labor force participation among low- and middle-income individuals and families with children, and especially women with children, and puts money back into the hands of working taxpayers who need it most.
In addition to incentivizing employment and boosting earnings of qualified workers, the EITC improves health and educational outcomes for children in low-income families, and helps military families and veterans make ends meet, she said.
The lawmaker said restoring the EITC and reducing the tax burden on low- and moderate-income working families and taxpayers will also stimulate the economy, since those who qualify for tax refunds are likely to spend that money immediately.
“We must do our part locally…to help the Commonwealth’s struggling families get back on their feet. Restoring the EITC is a good start,” she said.