Coalition puts tax breaks for low-income workers on table

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BOSTON (SHNS) – Increasing a tax credit that aids low-income workers and establishing a near-universal child and family tax credit are among the priorities for a coalition that includes community action agencies around Massachusetts, who see the changes as geared toward reducing poverty.

Lawmakers aimed to provide tax relief last summer that would have included an increase in the state’s Earned Income Tax Credit (EITC), which essentially subsidizes low- and moderate-income workers’ wages. But tax credit reforms were derailed at the end of July and cut from an economic development bill that passed in the fall. Now, the Healthy Families Tax Credits Coalition is calling on state officials to follow through with reforms, including combining the Household Dependent Tax Credit (HDTC) with the Dependent Care Tax Credit (DCTC) into a single Child and Family Tax Credit, so tax filers will not have to choose one credit or the other.

They’re also calling for the state to increase the value of the newly-combined family credit to at least $600 per dependent. The economic development package lawmakers passed in July, then later changed to remove tax relief, would have combined the two tax credits and increased their value to $310 per dependent.

The coalition proposal would also remove the dependent age limits on the new family credit to include all children under 18. Raising the child and dependent tax credit to $310 per dependent and removing the cap would provide more than $130 million in relief to more than 700,000 families, Rep. Mark Cusack, then-Revenue Committee chairman, said of the House’s economic development bill in July.

“Regardless of the direction of the economy, lawmakers eyeing tax reform would do well to increase the Child and Family Tax Credit,” said Phineas Baxandall, policy director at the Mass. Budget and Policy Center. “Legislative leaders and candidate Healey have endorsed increasing the credit as a way to help struggling families cope with rising living costs. If the economy slows, the need to help these families will be even greater.”

The coalition is also calling for the state to increase the state match rate from 30 percent of the federal EITC to 50 percent of the federal credit. Raising the EITC from 30 percent of the federal credit to 40 percent, which was the House’s proposed increase last session, would help nearly 400,000 families making less than $57,000 a year and provide relief of over $91 million, Cusack said at the time.

“We are thrilled to work with the new administration and our longtime House and Senate champions to pass meaningful and inclusive tax relief that improves the health and well-being of hundreds of thousands of families in the commonwealth,” said coalition co-lead Allison Bovell-Ammon of Children’s HealthWatch.