A legislative committee on finance policy heard testimony Friday on an income tax cut plan that scales back elements of tax relief proposed by Gov. Ned Lamont, which had extended to wealthier Connecticut households.
In most regards, the bill crafted by the Finance, Revenue and Bonding Committee mirrors the income tax cuts proposed by the governor.
Both look to reduce the tax rate of the state’s two lowest income brackets, but where Lamont’s cuts extend to many affluent families as a result of the way Connecticut’s income tax is structured, the committee bill will attempt to roll back over time the cuts for taxpayers above certain income thresholds.
The bill is a work in progress, which Rep. Maria Horn, a Salisbury Democrat who co-chairs the tax-writing panel, called “an experiment” during an interview Friday.
“The governor’s proposal tails off into some quite lofty income ranges, and I don’t think it’s meaningful for somebody who makes $600,000 a year to get a $100 tax credit,” Horn said. “Why not take that relief and target it to those who really most need it. So in addition to moderating the cut itself, it also targets the benefit toward the particular income levels that use those two rates that are being cut.”
There is bipartisan support for confining the income tax relief to families making below certain thresholds. Rep. Holly Cheeseman, a ranking Republican on the committee from East Lyme, said the cuts should target filers who have not qualified for programs like Earned Income Tax Credit for the working poor but also did not benefit from a surge in capital gains.
“We believe tax relief should be focused on those most in need and that would include middle income single earners and couples who haven’t benefited from increases in the EITC or our child tax credit but have seen increased cost of living and have been dealing with inflation,” Cheeseman said.
Like the governor’s bill, the committee’s proposal would also increase the Earned Income Tax Credit for the working poor from 30.5% to 40%. Horn said a provision paring back tax cuts for richer families may free up revenue to dedicate to other targeted tax relief proposals, potentially including some version of a child tax credit, which some legislative Democrats and progressive advocates have pushed for throughout this session.
State Comptroller Sean Scanlon, a former chair of the Finance, Revenue and Bonding Committee, held a press conference Friday morning to tout the impact of a one-time child tax credit he helped to pass last year and urge legislators to adopt an ongoing credit.
During Friday’s hearing, several speakers asked the committee to adopt a permanent child tax credit to complement the EITC increase.
Horn said her committee was still considering a more limited version of the concept.
“I would find it very hard for us to make it permanent, but is it totally off the table? No,” she said. “We just need to see if we have room for it and how the numbers add up. It’s going to be harder than I think a lot of people think.”
The Lamont administration did not immediately weigh in either for or against the changes. Its budget officials did not testify during the hearing and a fiscal spokesman declined to offer commentary on Friday.