Connecticut took a major step forward on behalf of low-income working families last week, enacting an Earned Income Tax Credit worth 30 percent of the federal EITC. Hundreds of thousands of residents will benefit, and local businesses will get a boost as those families spend that money to meet basic needs. The new credit will lift an estimated 9,000 people out of poverty and ease poverty for over 100,000 more.
Meanwhile, Michigan’s Senate put forth a proposal to preserve the state’s EITC at a much reduced rate rather than eliminate it entirely, as Governor Rick Snyder had proposed and the House had approved.
The new deal, which reportedly has the governor’s support, would maintain an EITC worth 6 percent of the federal credit (down from 20 percent today), using funds the House had dedicated to a $25 credit for each EITC-eligible child and an increase in the property tax credit for low-income families. (Nearly half of all Michigan’s EITC recipients don’t receive this credit and thus wouldn’t have benefited from the increase.)
While shrinking the EITC to 6 percent represents a 70 percent cut, it is a welcome shift from the position that the governor and legislative leaders took earlier this year. It also preserves the structure of the credit, which encourages and rewards work and reduces poverty.