EITC Increase Dies But Northrup Grumman Gets Corporate Welfare

One of the big battles of the General Assembly’s now ended legislative session centered around proposals to increase the Earned Income Tax Credit (EITC) and to cut taxes. Both the Senate and the House proposed an increase in the EITC. But while the Senate tied it to a cut in marginal rates for the top 11.1%, the House passed a broad based tax cut.

No EITC or Middle Class Tax Cuts

Conference negotiations resulted in stalemate, as the Senate held out for its tax cut on the wealthy. As a result, no tax cuts and no increase in the EITC. The political sense in the Senate’s position was lost on me. The Democratic-controlled Senate held the EITC hostage to a tax cut for the wealthy for which the Governor would inevitably claim all the credit. Bad policy and bad politics.

Don’t Worry, We Have Northrup Grumman’s Back

Meanwhile, the General Assembly passed a $37.5 million tax credit for Northrup Grumman. The Senate even voted down an amendment that proposed to make it nonrefundable. While the legislature made progress on other fronts, the General Assembly bombed the fundamentals on tax policy.

Heck, Republicans should have opposed this turkey too. If you really believe in the free market, then you should also believe that government should not pick winners and losers or give some businesses special treatment.

Sen. Rich Madaleno, who opposed the tax cut for the wealthy and the corporate welfare for Northrup Grumman, summed up the situation well in a tweet: “Sadly only Northrup Grumman gets expanded EITC.”

How Did They Vote?

That’s for tomorrow’s post.