Governor Baker and the Massachusetts Senate have put forth two separate proposals to increase the Earned Income Tax Credit for working families in our state. This is a brave step to address income inequality for the residents of our state and should be commended.
As Mayor of Everett, I meet residents everyday who are working hard to raise a family, pay the bills, and have a little bit left over at the end of the month to save for emergencies. Increasing the Earned Income Tax Credit for working families will help lift more residents into the middle class and put them on a path to long term economic security.
The current Massachusetts EITC was established in 1997 at 15% of the Federal EITC rate. If someone receives $100 in Federal EITC, they will receive an additional $15 from the state. This program has been shown to be one of the most effective tools in fighting poverty and lifting incomes for working people. Currently, approximately 415,000 Massachusetts residents, including 4,316 in the city of Everett, receive the EITC on an annual basis. This program rewards work over wealth and has both long term and short term benefits.
Recent studies have shown that the majority of the EITC benefits go to families with children. In addition, children from EITC households have been shown to have higher test scores, higher high school graduation rates, and higher college attendance rates. Long term studies have shown that children who grow up in EITC supported households tend to earn more when they are working adults.
Governor Baker proposed doubling the EITC from 15% to 30% while repealing the film tax credit as a way to pay for the increase in EITC. The Governor deserves a large amount of credit for putting a proposal on the table and a method to pay for a majority of the increase. The Senate also adopted an amendment to examine the film tax credit to potentially restructure it in a way that maximizes the credits to Massachusetts based businesses and residents
The Massachusetts State Senate recently voted to guarantee a tax cut for all taxpayers in the Commonwealth that focuses on helping working families and not rewarding wealth. The Senate plan increases the EITC from 15% to 22.5% over three years while also increasing the personal exemption for all taxpayers.
It’s up the legislature and the Governor to figure out which plan will be adopted but I commend them both for starting the conversation about how we address helping working families in a meaningful way by putting specific plans on the table.
Recent studies have shown a widening wealth gap in Massachusetts and increasing the EITC is a start to address income inequality to help those who need it the most. The combination of wage stagnation, increased housing and energy costs, have put a drag on our economy and we need to reward the hardworking people of Everett rather than those at the top. I strongly support the efforts at the state level to increase the EITC for working families.