Governor Charlie Baker on Monday proposed doubling the tax credit, and several state lawmakers on both sides of the aisle have introduced bills to increase it — including one that would more than triple the tax relief. and would give Massachusetts the largest state earned income tax credit in the nation. If the state were to triple the tax credit, joint filers with three or more children could get up to $3,072
state return, compared to $921 under the current program.
For Burrell, the maximum increase would mean around $1,900
more in his pocket each year.
“It would make a huge difference to me,” she said, noting that she had a light overdue bill, credit card debt and student loans – and about 50 cents in her savings account.
The Earned Income Tax Credit, enacted by the federal government in 1975 and the state in 1997, has won bipartisan support because it achieves goals espoused by both parties: it helps the poor and rewards the job. If you are not working, you are not eligible. U.S. Representative Paul Ryan, a Republican from Wisconsin and chairman of the House Budget Committee, announced a federal increase — doubling the maximum credit for childless workers to around $1,000 — similar to that proposed by President Obama.
Low-wage workers who meet income and family size requirements are eligible for a federal earned income tax credit, and 25 states offer an additional credit. In Massachusetts, the state credit is 15% of the federal amount. The most generous proposal on Beacon Hill would increase it to 50%, raising the tax credit to an average of nearly $1,000 per person, up from $300 previously.
Several hundred dollars are sometimes enough to keep people in their homes. If low-income workers have car trouble and can’t afford to pay $300 to get it fixed, for example, they might not be able to get to work, which could mean missing a pay check. pays, falling behind on rent and getting evicted, said Dr. Megan Sandel, a pediatrician and principal investigator of Children’s HealthWatch, a Boston-based network of researchers that tracks children’s health and a proponent of increased child credit. tax.
The extra money can also have a profound impact on future health and income. Research has shown that expanding the Earned Income Tax Credit not only increases labor force participation, but also reduces low birth weight births, improves test scores and encourages families to buy more food. healthy. “This may be a bill that is going to help my patients almost as much as any other type of health intervention,” Sandel said.
Elizabeth Torres, who earns $17 an hour working part-time with at-risk youth in Mission Hill, said a bigger tax credit could allow her to pay her rent all at once, instead to break it up into bi-weekly installments so she can juggle other bills. She would receive about $1,900 with the highest proposed raise.
The extra income could also help Torres, 49, who has two children at home, a high school student and a Roxbury Community College student, pay off his school loans, repair his credit and save for his ultimate goal: “I want try and go house hunting,” she said.
Massachusetts hasn’t increased the earned income tax credit since 2001, but now is the time for a substantial boost, said State Sen. James Eldridge, an Acton Democrat sponsoring the bill. law for more than triple it. Nationally, 19 states decided to increase or create an earned income tax credit last year.
“There is a real push this session on how to tackle inequality, and the EITC is a proven tool that puts money in the pockets of poor families,” he said.
Following last summer’s debate over raising the minimum wage, Massachusetts lawmakers are shifting their focus back to helping the working poor, state Senate Republican Leader Bruce Tarr said. , of Gloucester, which introduced a bill to double the current tax credit.
“This is an important use of tax credits to reward low-wage workers who work and seek to advance their economic future,” he said.
Wages haven’t increased for the state’s lowest-paid workers in decades, rising 8 cents an hour between 1979 and 2013, adjusted for inflation, to $9.06 an hour. time, according to the Economic Policy Institute, a Washington, DC think tank that advocates for low-income families. Housing and heating costs have skyrocketed.
Eldridge’s proposal would cost the state $372 million a year in tax revenue, up from $112 million currently, according to the Institute on Taxation and Economic Policy, a Washington research organization. Baker and Tarr’s proposal would increase its annual cost to $223 million.
To fund the increase, Baker proposed eliminating the movie tax credit. State Senator Benjamin
Downing, a Democrat from Pittsfield who has introduced a bill to double the size of the state credit to 30%, suggests keeping the state income tax rate at 5.15%, instead drop it to 5% by 2018 if overall revenue growth meets stated criteria. in a 2002 law, and use the proceeds to pay off the higher credit.
Katie Johnston can be reached at firstname.lastname@example.org. Follow her on Twitter @ktkjohnston.