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Protecting Low-Income Families from Regressive Tax Increases

A smart proposal in Maryland would expand the state’s Earned Income Tax Credit (EITC) to help offset the impact on low-income families of several proposed tax increases.

The proposed increases, in the state’s gas tax, water and sewer fees, and electricity rates, would help maintain roads, bridges, and public transportation and protect the environment.  But they would disproportionately affect low-income families (for reasons I explain in my testimony) at a time when the weak economy has left them especially vulnerable to a loss of income.

Fortunately, Maryland can offset the impact of these taxes on low-income working families with a modest expansion of the state’s EITC.  In so doing, Maryland can pay for critical services like transportation without taxing these families into, or deeper into, poverty.

This idea isn’t new.  In the past few years, Connecticut created an EITC and Indiana and Kansas expanded theirs at least in part to offset the impact of regressive tax increases.  Other states considering such tax increases should take a similar approach.