If enacted, the bill would significantly alter several existing tax provisions, allowing a broader grouping of individuals to claim the EITC. By redefining qualifying dependents to include aged dependents and qualifying students, the bill enhances the potential tax benefits available to more citizens, especially those facing financial hardships. Furthermore, it establishes a Community Volunteer Income Tax Assistance Matching Grant Program to support initiatives that provide assistance in preparing tax returns for low-income individuals, which further amplifies the reach of the proposed financial assistance.
House Bill 5421, known as the EITC Modernization Act, seeks to amend the Internal Revenue Code of 1986 by extending the earned income tax credit (EITC) to all taxpayers with dependents as well as qualifying students. The primary objective of the bill is to increase financial support for low- and middle-income families, thereby reducing child poverty and promoting employment opportunities. This initiative aims to address the widening income gap in the United States and provide essential resources to struggling families who may benefit from such fiscal measures.
Debate surrounding HB5421 has centered on the effectiveness and necessity of expanding the EITC. Supporters argue that broadening eligibility reflects a recognition of today’s economic realities while opponents caution that it may lead to increased governmental spending without proportionally enhancing tax compliance or accountability measures in tax assistance programs. Additionally, there may be concerns regarding the program's implementation and oversight, particularly in ensuring funds are allocated efficiently and appropriately to ensure maximum benefit for low-income populations.