The Earned Income Tax Credit, or EITC, has improved the lives of millions of poor children and their families while providing a long-lasting and widespread boost to Maine’s economy. We have decades of data and can say definitively that this refundable tax credit is effective.
As leaders in our respective parties, we both agree that helping working Mainers stay afloat and get ahead is a top priority.
Late last month, the Legislature’s Taxation Committee, in a unanimous, bipartisan vote, endorsed an expansion of the EITC in Maine. Those committee members are building on a proud legacy of rewarding work.
Research shows that since the federal EITC was expanded in the 1990s, the lives of low- and moderate-income working families who received the credit have improved significantly. It didn’t just allow them to get by a little easier and afford the basics; the tax credit led to an increase in their employment and wages and a decrease in their need to access public assistance.
For children of families who receive the EITC, the benefits are even more significant. With this economic intervention, kids do better in school, are more likely to go to college and earn substantially more through employment later in life.
In short, the EITC shows us a pathway to achieve a core goal identified by both Gov. Janet Mills and her Republican predecessor, Gov. Paul LePage: breaking the chain of intergenerational poverty in Maine.
The federal EITC has been so successful that 29 states have implemented some version of the credit as well. Currently, however, Maine’s is among the smallest in the nation. The bill approved by the Taxation Committee would more than quadruple our state’s credit, boosting income tax refunds for some eligible families by hundreds of dollars.
The plan will also make sure more middle-class families are eligible, by increasing the income eligibility cap for families with children up to $55,000 a year, and for adults without children who earn up to $27,000, or about $13 per hour. It’s also designed to increase awareness of the credit by asking employers to share information with their employees who may be eligible. That’s important because today, one in five eligible working Mainers don’t receive the EITC because they don’t file for it in their taxes.
Another part of the proposal endorsed by the committee would recognize Mainers who work hard but may not receive a paycheck. For the first time, low-income students and those who care for aging or disabled loved ones at home could be eligible for a minimum benefit equal to half of the maximum credit. Caring for children, Mainers with disabilities and the elderly is real work — most often done by Maine women. As our population continues to age, it is increasingly important to recognize the important role these caregivers play. Many Maine families simply cannot afford to support an elderly parent in an assisted-living facility or pay for in-home hospice care. That means they’re faced with the difficult decision of scaling back or leaving their paid job to make sure their loved one gets the care they need at home.
A second legislative proposal would set up a study to examine how the Earned Income Tax Credit, as well as all the other tax programs that help low-income Mainers, could be used to provide periodic payments to all those who qualify. Not having to wait for tax season to collect these resources could promote yearlong relief for people trying to keep up with bills, make improvements in their living situation or even make heating payments that some have to defer during the course of the winter.
Helping working families to make ends meet isn’t a partisan issue. That’s why we both support modernizing and expanding Maine’s EITC, and why we believe our colleagues in the House and Senate should follow the lead of members from both parties on the Taxation Committee by enacting this common-sense tax policy. It’s what’s right for working Mainers and our economy.
Sen. Eloise Vitelli, D-Arrowsic, is the assistant Senate majority leader. Rep. Trey Stewart, R-Presque Isle, is the assistant House minority leader.