KANSAS TAXPAYERS NETWORK
P.O. Box 20050
Wichita, KS 67208
316-684-0082
FAX 316-684-7527

21 January 1998

To: Legislative Tax Committee Members

From: Karl Peterjohn, Exec. Dir.

Subject: Earned Income Tax Credit Proposals

Establishing a state earned income tax credit program raises a number of problems. Attached with this memo is a Joint Economic Committee report from the U.S. Congress concerning problems which Senate Finance Committee Chairman, Sen. William Roth, R-Delaware describes as, "..in the program have made it a boon for tax cheats and rip off artists."

We don't need to create more opportunities for waste, fraud, and abuse through the state's tax code. Other scholarly organizations like the National Center for Policy Analysis and the Tax Foundation have uncovered serious problems with the federal earned income tax credit.

KTN views the earned income tax credit program as a flawed program which was begun in a compromise between then President Reagan and congressional Democrats lead by House Ways and Means Chairman Dan Rostenkowski as part of the federal tax reform in the 1980's. Despite the good intentions and bi-partisanship in establishing this tax credit the earned income program is seriously flawed and it would be better to aid low income workers through eliminating the Kansas sales tax on food or increasing the personal exemption on the state's income tax.

The conclusion of this report says, "Not only is the (EITC) program plagued with fraud and abuse, it can no longer accurately target the citizens it was designed to help. Therefore, the time has come to take a hard look at EITC, to determine its future viability." This does not describe a program which Kansas should emulate federal tax policy.

I hope you will take the time to carefully examine this federal JEC study.