The Earned Income Tax Credit (EITC) is a powerful tool for helping low-income working families, but to effectively raise Marylanders out of poverty and foster broad-based prosperity, it must work alongside other measures, including a boost in the minimum wage. Recently, some policymakers in Maryland have portrayed  the EITC as some kind of super-policy that can fight poverty on its own, but  this is not the case. The EITC – a federal tax credit that Maryland supplements with a state EITC — makes low-wage work more viable for families by offsetting some of the taxes they pay and boosting their income. However, as the non-partisan Center on Budget and Policy Priorities pointed outthis week, there are some things that the EITC cannot do, like helping people who are out of work or unable to work, or helping the poorest families that do not make enough to qualify for the credit.…

As Maryland lawmakers start working out differences between the Senate and House budget plans, they should take advantage of numerous options to fully restore unwise and unnecessary cuts to needed programs and services for working families. Both plans rely on spending cuts first proposed in the Governor’s budget and add additional cuts as well. They would cut $400 million over the next two years from planned reinvestment payments to the state’s pension system, double what the Governor proposed cutting. The state Comptroller and Treasurer both advise against these cuts.  Both chambers’ budgets also shift funding for Land Preservation/Open Space programs and the Bays Trust Fund and use the money to balance the budget. Source: Senate Budget & Tax and House Appropriations Committees (click to enlarge) The House budget does restore funding to some programs cut in the Senate’s version, but some of its other provisions would hurt working families. The…

While the series ‘‘House of Cards’’ depicts politics as a deeply corrupt charade in which key players scheme and backstab behind the scenes to get their way, recent developments in Annapolis depict a simpler reality: lawmakers will give you money if you publicly threaten them. The Maryland Senate  voted overwhelmingly (45 – 1) to increase the amount of tax breaks available to film productions  in Maryland after the makers of “House of Cards” threatened to take their stage sets elsewhere. If the House knuckles under too, this would be the second time in as many years that Maryland has increased these subsidies in response to such threats. Lawmakers ought to get some backbone and consider a more stable and long-term approach to economic development in the state.   In 2011, the General Assembly enacted a system of tax credits that allows the Department of Business and Economic Development (DBED) to award…

While state lawmakers in Annapolis discuss cutting important services and investments in an effort to balance Maryland’s state budget, we got further evidence today that large, profitable corporations are able to avoid paying their fair share of state taxes that support those services and investments. According to a new report, the 269 Fortune 500 companies that disclose their state income tax payments were able to avoid paying taxes on more than half of their profits. Some companies managed to not pay any state income taxes. The list of companies that are able to avoid paying their fair share in taxes includes major companies that Maryland residents do business with every day. Marylanders support these companies when they go out to eat (Yum! brand restaurants like Pizza Hut and Taco Bell), surf the web (Yahoo, Facebook, Priceline.com), or pay their utility bills (Verizon, PG&E, Pepco, Comcast). Besides supporting such corporations with…

Maryland’s General Assembly has a unique opportunity to help the working poor in a variety of ways this session—including by expanding the refundable portion of the state’s Earned Income Tax Credit. On Wednesday, the Senate Budget and Taxation Committee heard testimony on a bill to expand Maryland’s Earned Income Tax Credit (EITC), which fights poverty while encouraging people to work more hours in low-wage jobs. If passed, the bill would increase Maryland’s refundable EITC to 28 percent from 25 percent of the federal EITC, giving an additional boost to 422,019 Maryland households and lifting more Marylanders out of poverty. A portion of Maryland’s EITC is refundable, meaning that if it exceeds the amount of taxes owed, the balance is returned to the taxpayer. By providing a credit that increases as earnings increase up to a certain amount, the EITCencourages work. It is also an effective tool to decrease inequality and lift families out of poverty by leaving low-wage…

While the recently passed Senate budgetavoids large cuts to services, the Senate plan includes unwise and unnecessary spending cuts and other short-term budget-balancing maneuvers that will cause long-term financial problems for the state. The Senate ought to reconsider its approach by adopting proposals that would responsibly boost revenue and abandoning irresponsible tax cuts that largely benefit corporations and millionaires. In addressing the recently released estimate expecting $238 million less revenue, the Senate relied on spending cuts to bring the budget into balance. In the face of this large reliance on spending cuts, state leaders should certainly not cut to the state corporate income tax or increase the estate tax exemption. These would put the state in even worse financial shape.   Source: Senate Budget & Tax Committee  While the Senate’s plan will balance the budget in the short term, it will cost Maryland in the future. While Governor O’Malley’s budget…

Recent weeks have seen promising developments at the state and national level regarding the Earned Income Tax Credit(EITC), an important credit for low and moderate income working people. The EITC helps offset federal payroll and income taxes, reduces poverty and income inequality, strengthen work incentives, and gives a boost to Maryland’s economy. At the federal level, President Obama’s Fiscal Year 2015 budget calls for the EITC to include more adults without children, who currently receive little or nothing from the EITC. Doing so would help 210,000 people in Marylandby substantially increasing their after-tax incomes and incentive to work. The President’s budget would also make workers between the ages of 21 and 25 eligible who currently are excluded. This is especially important for recent graduates with student debt and other young people who face multiple challenges when beginning their working careers, helping them gain a foothold in the economy. Currently, a childless adult…

Lawmakers in Annapolis have the opportunity to provide more Marylanders with health coverage and make state government more efficient at the same time. Although Maryland has expanded Medicaid eligibility under the Affordable Care Act, tens of thousands of eligible residents are not yet enrolled. That could be corrected by legislation — the Medicaid Streamlined Eligibility Act (HB 954) — that would automatically enroll individuals in Medicaid if they are eligible  for the federal Supplemental Nutrition Assistance  Program (SNAP) or  if their children are eligible for Medicaid. The legislation, which was the subject of a committee hearing this week, would also allow 12-month continuous Medicaid eligibility for parents and children. Besides increasing access to health coverage, adopting these measures would end costly, duplicative verification processes  for safety net programs with similar eligibility levels. That’s particularly true of the provision that would link Medicaid and SNAP eligibility. Some 84.4 percent of all…

Yesterday’s significantly lower projections by the Board of Revenue Estimates mean proposed reductions in Maryland’s estate tax and corporate income tax ought to be abandoned by legislators. Maryland can’t afford the cost and still do everything needed to build a strong economic future for the state. According to yesterday’s press release from the Comptroller’s Office, the BRE decreased expected revenue collections for the current state fiscal year and the next one by $237.8 million, mostly as a result of lower projections for the personal income and sales taxes. Since the Governor’s proposed budget is balanced using BRE’s December estimates, this latest revenue write-down creates a gap that must be closed before the legislature can pass a balanced budget next month.  Source: Board of Revenue Estimates (click to enlarge)  Source: Board of Revenue Estimates (click to enlarge) It would make sense for legislators looking at yesterday’s numbers to reject proposals to slash revenues…

As a flurry of recommended cuts by state fiscal analysts come down like quickly falling snow it’s becoming ever more important for lawmakers to avoid the temptation of tax cuts and preserve essential services when they develop the state’s spending plan for the coming fiscal year. In particular, two proposals being talked about – cutting the corporate income tax and reducing the number of wealthy heirs that would pay estate tax – should be taken off the table. Supporters claim these measures would help the state’s economy. Instead they shoot the state’s prospects in the foot by taking away millions of dollars needed for schools, transportation and other investments that create jobs and promote prosperity. Those two tax cuts alone would cost the state over $100 million next year and more than $400 million after five years. These proposals are especially troubling in light of reportswarning that upcoming official revenue…