2012 tax season: Later deadline, smaller refund?
Bob Moon: Tax procrastinators, breathe easy. This year’s deadline is tomorrow, April 17th. There’s extra time because April 15th fell on a Sunday this year, and today is Emancipation Day in the District of Columbia. Under federal law, D.C. holidays affect tax deadlines the same as federal holidays. Still, many people across the country are busy filing their returns in anticipation of a refund. And in states like Wisconsin, those refund checks could be a little smaller.
From Milwaukee Public Radio, LaToya Dennis explains.
LaToya Dennis: Monay Avery just got good news about her taxes. She came here to Milwaukee’s Social Development Commission for help. Avery just found out she qualifies for the Earned Income Tax Credit. Now that she knows a big refund is headed her way, she’s already planning how to spend the money.
Monay Avery: Pay bills, that’s it, pay bills.
Avery has four children and doesn’t make much as a nursing assistant. She’s grateful for the tax credit.
Scott Drewianka: It’s like a wage subsidy that the government pays in the form of a tax credit.
Scott Drewianka teaches economics at University of Wisconsin-Milwaukee. He says the credit is one of the most effective ways of boosting incomes.
Drewianka: The idea of the earned income tax credit was to make work pay better than it actually does.
When President Obama introduced the stimulus package three years ago, the federal government made it easier for some families to get more money.
But Rick Chandler says his state can’t afford it. Chandler is Secretary of the Wisconsin Department of Revenue. He says Wisconsin’s credit is tied to the federal government’s credit.
Rick Chandler: We had to make sure that we could accommodate all of our priorities.
So the Wisconsin legislature set a new cap on the tax credit. Now families will see a decrease anywhere from 3 to 9 percent. Michigan has also approved a similar reduction.
Erica Williams is an analyst with the Center on Budgets and Policy Priorities. She says the cuts could backfire.
Erica Williams: Supporting families now also helps to keep money in their pockets that they can go out and spend. And it kind of helps to keep them economically active.
Still, Williams says it’s not all bad news. Connecticut just adopted its version of the earned income tax credit. And Illinois voted to increase its offering to low-income families.
In Milwaukee, I’m LaToya Dennis for Marketplace.
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