The earned income tax credit (EITC) reduces poverty, promotes work, and, for children in low-income working families, it increases lifetime earnings. Unfortunately, Maine’s version of the credit is much too small to be effective and is not refundable.
Good Afternoon Senator McCormick, Representative Goode, and members of Joint Standing Committee on Taxation. I’m Joel Johnson, an economist working at the Maine Center for Economic Policy. I’m here today to testify in support of legislation that would improve Maine’s Earned Income Tax Credit.
The earned income tax credit (EITC) reduces poverty, promotes work, and, for children in low-income working families, it increases lifetime earnings. Unfortunately, Maine’s version of the credit is much too small to be effective and is not refundable (the value of the credit cannot exceed a family’s tax liability). Only 20,000 Maine families received an average state credit of approximately $55 in 2013. To reduce poverty and make work pay for Maine’s low-income families, especially those with children, state policymakers should increase the size of Maine’s EITC to 20% of the federal credit and make it refundable.
Please see the enclosed policy brief for more information about how Maine’s EITC works and how Maine’s EITC affects low-income families in every legislative district of the state.
Thank you for your consideration of this important legislation.
