Even though some of the advocates in the room Tuesday complained that Gov. Dannel P. Malloy’s budget didn’t increase income taxes enough on the wealthy, they applauded his decision to implement the state’s first Earned Income Tax Credit, which will be implemented in the upcoming tax filing season.
“This is about working families and encouraging work and making our economy strong,” Malloy said in describing the tax credit to a roomful of advocates.
Advocates, who pushed for the credit for more than a decade, gathered at the Capitol Tuesday to celebrate its passage. The celebration marks the beginning of the tax credit’s implementation, which coincides with tax return season.
Opponents of the tax credit say it offers people who don’t pay income taxes a windfall. However, advocates like Sen. Majority Leader Martin Looney said that type of opposition presents “a very narrow view of who is a taxpayer in our state.”
The close to 190,000 families that will qualify for the credit may not have any state income tax liability, but they do pay other taxes. Looney said research shows that they pay a higher percentage of their income in sales and gasoline taxes than affluent people. He said they’re also paying property taxes through their rent.
Malloy, who was credited by advocates and proponents of the tax credit, for helping them get the legislation over the finish line, said when combined with the federal EITC the state’s economy will see a boost of more than $400 million in a very short period of time.
Malloy said the state has been encouraging residents over the past few months to get a job, any job because it will put them in line for this tax credit. Malloy warned the group that their work on this tax credit program can’t stop now because it still needs to be properly implemented and people still need to know they qualify for it.
“We got to make sure that we can do everything we can to encourage every filer who may not understand it or may skip filing, because they think their earnings are such that it’s not important, to actually file their income tax return,” Malloy said.
He said he knows that with a $3.5 billion deficit some people thought his administration was crazy to budget $110 million for a state EITC.
“Doing some of the difficult things we had to do under this last state budget knowing it contained this rather large Earned Income Tax Credit made doing some of those things easier, understanding we were finding a way to help Connecticut working families,” Malloy said.
Malloy thanked Looney for being the chief proponent of the legislation for the past 12 years until the state elected its first Democratic governor in 20 years.
“What a difference it is to have a partner rather than an adversary in that position,” Looney said as he turned to Malloy.
Looney, a proponent of the tax credit since 1999, said it empowers urban families, but it is by no means an exclusively an urban program.
“There are EITC recipients in just about every community in the state,” Looney said.
And despite the arguments of opponents, “They are in fact taxpayers and that is what this EITC finally recognizes in Connecticut.”
He said much of the EITC will be spent in those same communities where it was earned by those working families.
Jim Horan, executive director of the Connecticut Association of Human Services, said his organization got involved with advocating for an EITC in 2005 after they saw how the federal EITC transformed lives.
The National Center for Children in Poverty found that the federal EITC reduces poverty for young children by nearly 25 percent—more than any government program.
Department of Revenue Services Commissioner Kevin Sullivan said this program helps taxpayers and working families in the state of Connecticut.
“We know that despite the greater progressivity that has been added under the governor’s leadership to the income tax this year that lower income working families still do pay a higher proportion of their disposable income in taxes than folks anywhere else in the scale of taxation,” Sullivan said.
He said his job now is to make sure every person who has “earned and deserved this tax credit” gets it.