Tag Archives: EITC

Hucker: MoCo Will Expand its EITC

By Adam Pagnucco.

Montgomery County Council President Tom Hucker has responded to our post from yesterday asking whether the county will match the state’s expansion of its earned income tax credit (EITC). The short version of Hucker’s response: hell yeah!

Yesterday, Hucker wrote on Facebook:

“Will MoCo Match the State’s Earned Income Tax Credit?” The answer is Yes, I believe Montgomery County will expand the County EITC to provide additional, targeted relief to our suffering working families.

I’ve asked CE Marc Elrich to add these matching county funds to the FY22 budget. And I believe my colleagues will agree. This follows the good news that the MD House Democrats improved the State relief package that our MDReliefNow.com coalition had advocated for by expanding the MD EITC.

The EITC is one of the most effective, targeted anti-poverty programs available to us, and expanding it during this historic recession is highly appropriate & urgent.

Hucker has a point on this: if the county executive puts the funding to expand the EITC in his recommended budget (due next month), it’s inconceivable that the council would cut it. And Elrich was both a co-sponsor and an unwavering supporter of restoring the EITC when the council passed legislation to do that in 2013.

Thanks to Tom Hucker for his advocacy on this issue and his work for broader relief for recession-impacted Marylanders.


Will MoCo Match the State’s Earned Income Tax Credit?

By Adam Pagnucco.

Last week, Maryland Matters reported that the House of Delegates attached a large expansion of the state’s earned income tax credit (EITC) to Governor Larry Hogan’s pandemic relief bill. That’s good news for working class people in Maryland. It’s also complicated news for Montgomery County’s leadership.

That’s because MoCo is one of the few local jurisdictions in the nation that has a local EITC. The county’s EITC is tied to the state’s by county law. If the state’s EITC grows, so might MoCo’s.

MoCo’s EITC (called the Working Families Income Supplement) was first proposed in 1999 by then-County Executive Doug Duncan. Freshman Council Member Phil Andrews had introduced living wage legislation for county contractor employees that Duncan opposed, so Duncan came up with an alternative package including a county EITC. In the end, the county council passed both the living wage law and the EITC and both remain on the books today.

The county EITC was originally specified to provide a 100% match for the state EITC. So if a tax filer obtained a $500 credit from the state, the filer could also obtain a $500 credit from the county. That framework prevailed until the county got into budget trouble during the Great Recession. In 2010, the council passed legislation decoupling the county EITC from the state EITC and making it subject to whatever appropriation the council wanted to pass for it. By FY12, the EITC’s value had shrunk to 68.9% of the state’s credit. In 2013, Council Member Hans Riemer introduced a bill phasing in a restoration of the county EITC to 100% of the state’s EITC, which passed. (Disclosure: I was Riemer’s chief of staff at the time.)

The county code now contains the following language on setting the level of the county EITC.

Sec. 20-79. Amount of Supplement.

(a) Subject to subsection (b), the amount of the Working Families Income Supplement paid to each recipient must equal the amount of any refund the recipient receives from the State earned income credit program.

(b) The Council may approve a different amount in the annual operating budget by an affirmative vote of at least five Councilmembers.

According to Maryland Matters, the value of the state’s EITC is set to increase by a range of 28% to 45% for three years. Under current county law, the county’s EITC “must” match it unless the county council decides differently. Whether the county’s EITC rises too depends on whether the county executive remembers to put it in his recommended budget and whether the council votes to approve it.

Needless to say, this is a very big deal for MoCo’s working class residents.

Among its many virtues, the EITC is well suited to the unique circumstances of the COVID recession. Consider this recession’s quintessential victim: the payroll employee who is laid off and now works in the gig economy to make ends meet. What assistance program is best targeted to help this person? Unemployment benefits might help but they have eligibility requirements and limited duration. Assistance to the employer might help but only if the worker is rehired. Rental assistance might help but only if the worker knows to apply for it and only if the landlord wants to accept it. (Some don’t.) Language barriers and outreach issues are further complications.

In contrast, anyone who files an income tax return can claim the EITC. It applies to all earned income, not just to payroll income. No new program needs to be set up, no bureaucrats need to be hired and no federal grants need to be administered. The county already has a volunteer income tax assistance program to help low and moderate income county residents claim it. And because we are in tax season, the timing is right for the EITC to put money into the pockets of those who need it right away. According to the comptroller’s office, electronic filers can get their refunds a few days after they file returns. Compare that to the weeks and sometimes months required to process and disburse county grant applications.

There is one drawback: the EITC costs money. In FY21, the county budgeted $20 million to pay it. If MoCo matches the proposed state increase, the county might have to pay an extra $6-9 million a year for three years. That doesn’t sound like much in a nearly $6 billion county budget, but the county does have revenue pressures and a new whopping $100 million a year liability in COVID emergency pay.

Tough times require tough choices. Workers who have seen their incomes plummet during the pandemic know that better than anyone. Expanding the EITC is one of the best ways to target assistance to them in their time of need. Will MoCo leaders make the tough budget choices to help them?


Senators for Corporate Welfare

The General Assembly couldn’t manage to pass an increase in the Earned Income Tax Credit (EITC) even though both houses supported it. In contrast, the bill giving Northrup Grumman a $37.5 million tax credit sailed to passage.

Who in the Maryland Senate supported this fine example of corporate welfare?

One Republican Against Corporate Welfare

Just about every Republican voted for the bill. Sen. Michael Hough (R-4) was the sole Republican who voted no, possibly because he is a conservative who (1) wants a simple tax code, (2) doesn’t think government should interfere in the free market by helping out only favored businesses, and (3) wonders why his tax paying constituents shouldn’t get the break instead of Northrup Grumman.

Democrats for Corporate Welfare

Nineteen Democrats joined the twelve Republicans who voted for the bill. The following chart lists them in decreasing order of support for Democrat Anthony Brown in the last election:

DforNGThough seven represent legislative districts that voted for Hogan, the rest hail from districts won by Brown. Nine of the 19 represent extremely safe Democratic districts. In these nine, Brown won by 59% or more, and all won election in 2014 by 62% or more.

Four more represent districts carried only narrowly by Brown (i.e. 50-52%). But even these senators do not face serious general election danger. Obama fared much better in the same territory, and Democrats won them by 57% or more in 2014 despite the terrible electoral fortunes faced by Democrats around the country.

Sen. Craig Zucker (D-14), recently appointed to replace retired Sen. Karen Montgomery, is tacking to the right of his predecessor. Besides voting in favor of giving money to Northrup Grumman, he also supported the tax cut for the wealthy. An interesting strategy as incumbent Sen. Rona Kramer lost to then-Del. Montgomery the primary after being attacked as too pro-business.

Dumb Politics

The politics of the legislation make little sense. It’s not even a question of alienating liberals. It’s hard to see how Democrats win more votes here from anyone. Are moderates, let alone liberals, really going to vote Democratic because Northrup Grumman received a tax giveaway?

The icing on the cake is that the Senate simultaneously killed off an increase in the EITC by standing firm in favor of a tax cut for the wealthy instead of for the middle class.


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.




House of Delegates Tax Bill Vastly Superior

The Maryland Senate has passed a tax cut that is directed at the top 11.1% of taxpayers. It would reduce marginal tax rates for individual taxpayers who make more than $100,000 and joint taxpayers who make more than $150,000, while the people who earn less than this receive no cut in their rates and get peanuts – or more specifically, money enough to buy a meal at Chipotle.

In contrast, the House of Delegates has passed far superior tax legislation. Instead of focusing the benefits on wealthy Marylanders, the House bill would lower the marginal rates on income earned between $3001 and $100,000 (and up to $150,000 for joint taxpayers). The wealthy would still get a break but this bill, appropriately, directs far more of the benefit to the much-squeezed working and middle classes. Like the Senate bill, the House bill also expands the Earned Income Tax Credit (EITC).

Politically, it should be a no brainer to junk the Senate bill and adopt the House legislation, particularly for Democrats. While maintaining the EITC changes much needed by the working poor, the House bill distributes the tax cut far more widely and equitably. Let’s hope that the House and the Speaker stand firm.


Who Supports the Senate’s Tax Cut for the Wealthy? Bueller? Bueller?

The Maryland Senate passed a cut in marginal tax rates that will only benefit the top 11.1% of Maryland taxpayers. It’s a tax cut that literally gives the wealthy enough to buy a nice iPad but leaves the middle class with barely enough to buy a meal for one at Chipotle (but they only get even that if they have exemptions).

The bill has crossed over to the House of Delegates. Lots of people and groups testified against the bill at the hearing before the House Ways and Means Committee, including:

Maryland CASH Campaign
Maryland Center on Economic Policy
Maryland Nonprofits
Health Care for the Homeless
Maryland State Education Association
Advocates of Children and Youth
Maryland Alliance for the Poor
League of Women Voters of Maryland
MD/DC State Council of SEIU
Maryland Working Families

The following groups also signed on to a letter protesting holding the increase in the Earned Income Tax Credit (EITC) hostage to a tax cut for high earners:

Advocates for Children and Youth
AFSCME Council 3
Baltimore CASH Campaign
Baltimore County Arts Guild
Baltimore Neighborhoods, Inc.
CAFÉ Montgomery
CASA of Baltimore County
Council for Bile Acid Deficiency Diseases
Fuel Fund of Maryland
Health Care for the Homeless
Job Opportunities Task Force
Laurel Advocacy and Referral Services
League of Women Voters of Maryland
Maryland CASH Campaign
Maryland Center on Economic Policy
Maryland Disability Law Center
Maryland Education Coalition
Maryland Nonprofits
Maryland PTA
Maryland State Education Association
Maryland Working Families
NAMI Maryland
National Association of Social Workers, Maryland Chapter
Pain Connection-Chronic Pain Outreach Center, Inc.
Public Justice Center
Progressive Maryland
SEIU Maryland Council
The Way Out Program

So who testified on the bill at the House Ways and Means Committee hearing?

Not Governor Larry Hogan. His office didn’t even bother to send anyone to support the tax cut for the wealthy.

In fact, no one testified in favor of the tax cut. Maybe the House should take that as a hint and shelve it.