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Policy Update, October 16, 2015 
Thank you for your interest and support. The Indiana Association of United Ways usually provides its Policy Update on "odd Fridays" (1st, 3rd and 5th Fridays). Contact us if you have any questions or comments about content (past, present or desired for the future).
Charitable Sector Priority Area
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Maggie Snyder and Lucinda Nord of our IaUW Policy-Advocacy Team provided this update.
At the Statehouse
What is an effective tax incentive?
The Interim Committee on Fiscal Policy reviewed the 2015 Indiana Tax Incentive Evaluation by the Legislative Services Agency (LSA) on 10/13. For the periodic review, LSA researchers are charged to review the following: 
  • Tax Incentive Claims - How many? Who claims? What's the income range for the taxpayer claiming a tax credit?
  • Taxpayer and Administrative Efficiency - What does it take for the taxpayer to claim? Which state agency administers? How efficient is the administration?
  • Analysis and Evaluation of Tax Incentive Effectiveness - What does the data show? What does the research show? Does each tax incentive actually affect taxpayer behavior? 

The Indiana General Assembly requires tax incentives--deductions, exemptions and credits--to be reviewed on a five-year cycle, per IC 2-5-3.2-1. For 2015, the evaluation focused on the Earned Income Tax Credit (EITC), five charitable giving incentives, four property rehabilitation incentives, two low-income dwelling incentives, 529 College Savings incentives, and Tax Incremental Financing (TIF) incentives. Certain members of the Fiscal Policy Committee are interested in a "but for" argument to maintain incentives, i.e. "but for" the tax credit, would the behavior or outcome have occurred?

 

IaUW applauds LSA on a comprehensive review that groups incentives with similar purposes. View our testimony from the 10/13 meeting, in support of EITC and NAP (described below). For a short overview of the report, view LSA's slide presentation.  
Income Priority Area
Indiana's EITC is effective pro-employment, anti-poverty tax policy.  
mom_daughter_smile.jpg The Indiana Earned Income Tax Credit (EITC) was created in 1999 as a calculation of the federal EITC. Twenty-six states and Washington, D.C., have state credits. The 2015 Indiana Tax Incentive Evaluation (described above) provides: an overview of the credit and how the federal EITC and State EITC work and interrelate; a summary of taxpayer claims over time; its impact on employment, poverty and traditional welfare programs; cost of administering the program; and a discussion of improper payments (a combination of inadvertent errors and intentional fraud).

Eligibility for EITC (because this is often misunderstood):
  • The taxpayer has to work and earn income within a range. The amount of Earned Income Credit is phased in when a worker doesn't earn much and is phased out after the worker earns income above poverty. (See the chart on p.9 of report.)
  • The taxpayer has to be a U.S. citizen or resident alien.
  • Qualifying children must meet relationship, age, residency and joint tax return tests.
Report highlights:
  • 518,068 working Hoosiers claimed the State EITC in 2013.
  • The Indiana EITC is primarily claimed by single working parents (78%).
  • The credit is effective in encouraging employment, especially by single mothers, and in lifting families out of poverty.
  • Indiana EITC fulfills a portion of Indiana's maintenance-of-effort requirement to receive federal funding for Temporary Assistance for Needy Families (TANF).
  • The EITC has lower administrative costs than traditional welfare programs.
  • The fact that Indiana's EITC is decoupled from the federal EITC may add to its complexity and increased errors.
IaUW supports continuation of Indiana's EITC and advocates recoupling State EITC to the Federal EITC. View our EITC one-pager. IaUW also supports expansion of volunteer income tax assistance and offers possible policy solutions to address improper payments.
Charitable Sector Priority Area
Certain charitable giving tax credits are effective!        money with bow
How many Hoosiers contribute to charity? What is the effect of the federal charitable deduction? What happens when the State offers a tax credit?  Which donors benefit most?

These are the questions explored in the introduction to the Charitable Giving Incentives section of the 2015 Indiana Tax Incentive Evaluation (described above, pages 18-51). The report evaluated five charitable giving incentives, explaining how each credit works, whether it is capped by the State appropriations or for the taxpayer, the income ranges of donors, how the credit interrelates to benefits of the federal deduction and the relationship to the beneficiaries. 
Incentive 
The Credit in Tax Year 2013
Key Finding(s)
Neighborhood Assistance Program (NAP) Tax Credit
2,417 taxpayers claimed $2,090,979 to support 233 nonprofits providing certain human services.Effective in attracting donors and in maximizing credits. Majority of donors are high-income.
Individual Development Account (IDA) Tax Credit113 taxpayers claimed $95,073 to support 5 IDA programs that work with part of the 1,016 low-income clients who have savings accounts.Ineffective in attracting donors, but may result from poor design or awareness. Donations comprise an important 15% part of IDA program budget and help maximize federal funds. 
College Contribution Tax Credit86,255 taxpayers claimed $8,588,748 to support Indiana's 60 eligible colleges and universities. Effective in attracting donors who represent earners across all income brackets. Habitual donors appear to increase donations over time.
School Scholarship Tax Credit1,937 taxpayers claimed $3,442,452 in credits from contributions to 5 scholarship granting organizations (SGOs).Effective in attracting donors who are interested in the cause and who are primarily high-income. Credit likely results in shifting donations from other charities and in additional state resources obligated to school scholarships.
21st Century Scholars Program Tax Credit245 taxpayers claimed $25,507 in credits.Ineffective in attracting donors and in results. The support fund has not been used in 25 years and would support the nontuition costs of only 1 of the 19,500 enrolled  in 21st Century Scholars Program. Some claims were inappropriate.
 
IaUW supports effective charitable giving incentives, such as Neighborhood Assistance Program Tax Credit. See our Charitable Giving one-pager or our quick grid of credits reviewed in 2015. 
At the Statehouse
StateCapitolDayLegislative Study Committee topics   
The interim study committees of the Indiana General Assembly have been announced with first committee dates. Check calendar. Of interest to our readers are:
2-1-1 - Take Action
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At the Statehouse - Take Action
Weigh in on issues important to you!
bullhorn We will try to summarize important opportunities to weigh in on rulemaking or public comment periods. Here are a few opportunities. 
  • FSSA Deaf and Hard of Hearing Services will accept comments on educational interpreter services through a hearing held on October 22.
  • The Governor's Council for People with Disabilities is holding several town hall meetings to discuss its five-year strategic plan. Review 7 policy statements to prepare. Register here.
    • Fort Wayne: Wednesday, October 21, 2-4:30pmET and 6-8:30pmET, Holiday Inn at IPFW and the Coliseum, Ball Room, 4111 Paul Shaffer Drive, Fort Wayne, Indiana 47925
    • Fishers: Wednesday, October 28, 2015, 2-4:30pmET and 6-8:30pmET, Delaware Township Community Center, 9094 E. 131st Street, Fishers, Indiana 46038
At the Statehouse
IaUW Public Policy
IaUW is a nonpartisan organization that works to advance policy principles and compromise solutions for the common good. We focus on policies that are aligned with the impact work in local communities conducted by our 61 United Ways and United Funds.
  • Education, so that children are prepared for and succeed in school;
  • Income/Financial Stability, so that individuals and families may achieve and sustain financial stability;
  • Health, so that individuals may access quality healthcare; and 
  • Strong Communities, where a statewide 2-1-1 network and a strong charitable sector help communities thrive.
Our policy priorities are developed and guided by our Public Policy Committee and our IaUW members, based on their work in Hoosier communities. 

Review our public policy documents created during the 2015 session of the Indiana General Assembly, including fact sheets, testimony and bill summaries. See our quick summary based on IaUW priorities.
Frequently Requested Links / Documents
  
iauw.org - Learn about the Indiana Association of United Ways, current trainings and conferences and the ways we support local United Ways/Funds, partners and communities.

IaUW Policy / Advocacy info - Review and download IaUW Policy Priorities, Third House calendar, bill lists, fact sheets, talking points and testimony.
  
Advocacy Action Center - Contact your member of Congress or State Legislator, provided through our partnership with United Way Worldwide.

IaUW Policy Update Archive - Read prior issues, special articles and key documents produced by IaUW related to public policy and advocacy.

Community Report Card - Check out key indicators in Education, Income and Health for your neighborhood, county or region.

IN211.org - Search for human service information available through the referral database or by calling 2-1-1. Download reports about resources, needs, gaps and trends from Indiana 211 Partnership.
  
NRN Calendar - Register for high-quality and affordable training for nonprofit staff and volunteers by the Indiana Nonprofit Resource Network.

Funding and Other Opportunities - Explore current requests for proposals, funding and recognition opportunities.

Indiana General Assembly
 - Check the hearing or floor schedule, watch a live or recorded hearing or floor session and look up your legislators. 

Library of Congress
 - Look up bills introduced in Congress. Note that the THOMAS site will be maintained through 2014 and fully replaced by Congress.gov.

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