Democrats and Republicans on the Maine legislature’s Taxation Committee came together Wednesday to move forward a proposal to increase the size of and eligibility for a refundable tax break specifically designed to put more money into the pockets of low-income Mainers.
Committee members hope that the bipartisan support behind significantly boosting the state’s existing Earned Income Tax Credit (EITC) will signal to the lawmakers charged with negotiating a new state budget in the weeks to come that funding the refundable credit should be a top priority.
“If we have something like this that has really broad support, I think we owe it to the people of Maine who expect us to come together on issues like this,” said state Sen. Matthew Pouliot, a Republican representing Kennebec.
Bipartisan bill would raise Maine’s credit from 5 to 23 percent of federal EITC
Over the last month, the committee has been working on two different bills — one sponsored by state Rep. Maureen “Mo” Terry (D-Gorham) and another by state Sen. Eloise Vitelli (D-Arrowsic) — both seeking to expand Maine’s EITC, which currently allows eligible Mainers to claim just 5 percent of the credit they receive from the federal EITC. This is far below what some other states allow in their versions of the federal program.
Terry’s bill was the more robust of the two, but the committee voted 10-1 to move nearly all of what she called for into Vitelli’s bill, which will now go before legislature’s Appropriations Committee to be funded, or not.
The combined bill lifts the state credit to 23 percent of the federal credit, bringing it in line with Massachusetts’ law, which committee members used as a comparator. Terry’s bill initially called for a 30-percent credit.
The amended bill also seeks to modernize what the Maine Revenue Service considers to be work. To be eligible for the tax credit, Mainers must show that they are working, and the consensus legislation expands that definition to include full-time college students and unpaid family caregivers.
The bill would also expand the state’s existing EITC by increasing the income levels at which tax filers are eligible, making 18- to 24-year-old childless adults eligible, and increasing the credit to 70 percent of the maximum credit for all childless adults.
Committee members hope expanded EITC will be a budget priority
To go into effect, the bipartisan bill will require the Appropriations Committee to allocate $94 million over the next two years. If fully funded, an estimated 177,000 households across the state would receive the credit. In addition to those working paid jobs, more than 14,000 family caregivers and almost 2,000 students will be included.
The committee considered several different version of the bill, each with a different fiscal note attached, but they ultimately supported the most robust of the alternatives.
“I’d like to send a big ask to appropriations and have it scaled back, not send a small ask then have it even further scaled back. Ideally, I’d rather have them not scale it back,” Pouliot said. “If there’s that much confluence of interests around a particular initiative, then it’s worth it to fund that.”
The Appropriations Committee must submit a budget to be signed by Governor Janet Mills at the end of June. The governor has been hesitant to repeal LePage-era tax breaks for high-income earners, which may constrain funding for legislative priorities, including the expanded EITC. With bipartisan support, however, Taxation Committee members hope that Vitelli’s amended bill rises to top of the pile.
“I’m a huge proponent of this program,” said Assistant House Republican Leader Trey Stewart (R-Presque Isle), who also serves on the Taxation Committee. “It does all the right things. It’s sort of where all worlds collide.”
Stewart suggested he and his fellow committee members draft a letter to the Appropriations Committee underscoring their support for the bill and its funding.
(Top photo: Rep. Mo Terry testifying before the Taxation Committee in March | official photo.)
Daily Updates