It’s expensive to raise a child, especially in Connecticut. That’s why some lawmakers are looking to include a child tax credit in this year’s budget.
Gov. Ned Lamont did not include the proposal in his budget this year, but lawmakers will be ready to counter with their own proposal in April. Part of their proposal may include a child tax credit that middle class families can claim as part of their income taxes or it could be another rebate program that they would have to apply for. Lawmakers haven’t decided yet, which direction they will go.
However, they did hear testimony this week about how helpful the money has been for families of young children.
Lisa Tepper Bates, president and CEO of the United Way, said a family of four has to make $110,000 a year in order to afford the basics in Connecticut.
Connecticut consistently ranks among the top five most expensive states for child care at an average of $16,990 a year. “Raising a child in Connecticut is more expensive than almost anywhere else in the country,” Tepper Bates told the Finance, Revenue and Bonding Committee Monday.
An estimated 77% of Connecticut residents make less than $66,000 per year.
Child care costs are up 35% since 2020, Tepper Bates said.
She said a lot of the families who qualified for last year’s rebate are not eligible for the Earned Income Tax Credit for the working poor.
Lamont increased the EITC as part of his budget proposal saying it would virtually eliminate the state income tax for around 215,000 families who qualify for the credit.
Rep. Eleni Kavros Degraw said when she was campaigning she heard from middle-class families who felt left behind.
“They feel like no one is listening to them and nobody cares,” Kavros Degraw said.
She said she hopes the committee moves forward with this because the federal government is reducing the child tax credit from $2,000 to $1,000 by 2025.
Last year lawmakers included a child tax rebate as part of the budget. The state gave back $100 million to families of 370,000 Connecticut children.
State Comptroller Sean Scanlon was the main proponent of the bill.
“While that’s great, doing it as a child tax credit would be a better policy move rather than a one-time rebate,” Scanlon told the committee he once chaired.
Rep. Holly Cheeseman, the ranking Republican on the committee, pointed out that not everyone in Connecticut has children.
Scanlon acknowledged that but said the money goes directly back into the economy to pay for things like child care and other services or goods consumed by children.
“When middle class families get the tax cut they spend the money,” Scanlon said.
He said young families with children are the ones who will help grow the economy and are the ones Connecticut wants to focus its tax code on, but he doesn’t oppose other broad based tax relief like a cut in the income tax. He said it will likely have to be a medley of tax relief at the end of the day.
“For every CTC dollar a recipient earns they return $1.38 to the economy, supporting not only their families but also their local economies and communities,” Tepper Bates said.