Sen. Martin Looney pictured. Christine Stuart photo
It’s not the sexiest issue the General Assembly will tackle this session, but for many low-income working families a state earned income tax credit would go a long way. Last month at an interfaith rally on social justice, Annette Womack said she ran out of room on the back of her program listing all the things she could do with an extra $200. In 1996 the federal earned income tax credit helped Womack pay the past due mortgage and bills that piled up while she was injured and unable to work. State Treasurer Denise Nappier said the situation for many in the state is not getting any better, in fact, in many instances its getting worse. More residents live in poverty today than they did four years ago and half of fulltime workers in the state earn less than is needed to support a family of three, she said. “We’re not talking about a handout, we’re talking about a hand-up,” Nappier said.
Senate Majority Leader Martin Looney, D-New Haven said the EITC is a tax break for people who work but do not earn high incomes. Last year it was squashed, but this year there seems to be more grassroots support. Opponents of the legislation often argue that the people who qualify for the credit don’t pay taxes, but Looney said research proves that’s not true. “Low-income, working folks pay many taxes, including a disproportionate amount of their income on sales taxes,” he said. There’s also research that shows those who qualify for the credit spend it on durable goods like appliances and furniture, or they make a down payment on a house or a car. The EITC also reduces the inequity that exists in the tax system. Based on a 2002 study by the Institute on Taxation and Economic Policy, Connecticut families earning more than $500,000 paid 4.4 percent of their income in taxes, those making between $37,000 and $60,000 a year paid 9.5 percent and those who earned $21,000 or less paid 10.3 percent of their income in taxes. Looney, who has championed this issue without success said he will work in a bipartisan manner to get it passed. Under his proposal working families with incomes up to $38,348 and qualify for the federal credit would qualify for the state program which would give them 20 percent of the federal credit. The average estimated credit would be $322 per family. Families that receive the maximum federal credit of $4,536 would receive a $907 from the state. At 20 percent of the federal EITC a state credit will cost the state about $53 million annually. And because the credit is treated as a tax expenditure it falls outside of the spending cap, which is at its lowest since it was enacted in 1985. It’s likely Republicans will oppose any increased expenditure. Thursday they held a press conference urging lawmakers to uphold the spending cap. But Gov. M. Jodi Rell said a week ago that she “would not categorically rule out exceeding the spending cap.” Editors note: This story may not be totally objective since in the past we have qualified to receive the credit