Governor Ned Lamont announced in late December that he would use federal COVID relief funds to retroactively increase the earned income tax credit to 41.5% for approximately 198,000 Connecticut families who have filed for EITCs. in 2020.
The move will cost $75 million, according to the governor’s press release, and would increase average credit by a few hundred dollars to a total of $925, according to Lisa Tepper-Bates, president and CEO of United Way of Connecticut. . The credit will be granted when individuals file their tax returns in 2022.
“It’s a month’s rent, it’s two months of utility bills, it’s two months of daycare for a toddler, it’s a much-needed repair to a car that provides transportation to work. “, Tepper-Bates said during a briefing with Lamont and Democrat. leaders yesterday.
The EITC is a federal and state tax credit for those who earn less than $52,000 per year, depending on the number of children in the household. Connecticut raised its EITC rate from 23% to 30.5% in legislation last year, but the governor is granting the additional credit based on the 2020 EITC rate.
Pro-Tem Senate Speaker Martin Looney, D-New Haven, thanked Lamont for using federal funds to raise the EITC and said he hopes the legislature can move forward to “make the EITC level permanent”.
Looney said the state’s EITC was temporarily lowered to 23% during the 2017 budget negotiations between Democrats and Republicans.
“These dollars will make a difference,” said Sen. John Fonfara, D-Hartford, co-chair of the finance, revenue and bond committee. “I think I probably represent more of these families as a percentage of the population that I represent than just about anyone.”
Fonfara’s co-chair on the finance committee, Rep. Sean Scanlon, D-Guilford, says increasing the EITC will help reduce poverty and child poverty in Connecticut. “I think this is something that we should all be focusing on, whether you’re a Democrat or a Republican, we need to lift Connecticut’s kids out of poverty,” Scanlon said.
However, House Republican Minority Leader Vincent Candelora, R-North Branford, said these targeted tax cuts do not compensate for state policies that impede job and income growth in Connecticut.
“Overall, Connecticutans should be disappointed that Governor Lamont and the Legislative Democrats’ singular approach to providing residents with financial assistance focuses on getting money to targeted groups of people rather than correction of their policies that have made our state an unaffordable place to live. and create jobs,” Candelora said in a press release.
Since the 2008 recession, Connecticut’s economic and job growth has been among the slowest in the nation, never fully recovering the jobs lost during that recession before the COVID pandemic hit in 2020. The shutdown of businesses due to lockdowns has forced hundreds of thousands of people out of work and onto unemployment.
Since businesses began to reopen, Connecticut’s job numbers have started to come back, but about 100,000 people have disappeared from the workforce and businesses continue to struggle to find help, even after growing. wages to stimulate interest.
While jobs in the middle to high income brackets have returned to pre-pandemic levels, low-income jobs – including jobs that would be filled by residents receiving the EITC – remain down 40%, according to Track the Recovery, a data website run by Harvard, Brown University, and the Bill & Melinda Gates Foundation. However, the EITC is available to middle-income individuals listed by Track the Recovery.
“Connecticut faces significant challenges, and today’s news conference will not help Main Street businesses fill the glut of job openings, or provide lasting respite to the range of taxes and fees that restrict opportunities and growth,” Candelora said.
“People deserve a raise, and that’s what we’re trying to do here,” Lamont said at the press conference. “It is also part of reviving our economy. We’ve taken a hit, as you know, over the past two years, and I have to do everything I can to get people back to work.
“Hard work pays off, and we will continue to try to uplift people every day with initiatives like this,” Lamont said.