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State Tax Credit Too Important To Cut

Connecticut's earned income tax credit helps working poor

Hartford Courant Editorial

March 12, 2013

The earned income tax credit, or EITC, is one of the best domestic policy tools ever invented. Since it can only be claimed by people who work and pay taxes, it encourages and rewards work. It keeps low-income wage earners out of poverty. The money saved goes right back into the local economy.

It would be a shame to cut it, even temporarily.

The state EITC was created two years ago and is worth 30 percent of a filer's federal EITC. In 2012, more than 180,000 families in Connecticut received the credit. People in every town claimed it (1,218 in Greenwich), according to a survey by Connecticut Voices for Children, a liberal-leaning think tank. The average gross income for these households was about $18,000; their average state credit was $600, with a federal credit of about $2,000.

In one of many proposals to balance the budget, Gov. Dannel P. Malloy has suggested reducing the credit from the current 30 percent of the federal EITC to 25 percent next year, 27.5 percent the year after that, and then restoring it to 30 percent in 2015.

Recipients almost invariably need the money for basics such as food, clothing, shelter or health care. Taking the credit away raises their taxes, in effect, causing them to pay a much higher share of their income on taxes than people making over $1 million a year, according to a recent study.

Supporters argue that the same $21 million the state would make with the cut in the EITC could be had, relatively painlessly, by tightening the phase-out of the property tax credit for six-figure earners. That seems fairer than whacking the people making $18,000 a year.