State, County Officials Propose Legislation Expanding State Earned Income Tax Credit (EITC)

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Contact: David Weaver, 240-777-6530 or
Delegate Sheila Hixson, 301-858-3469

For Immediate Release: February 9, 2000

State, County Officials
Propose Legislation Expanding
State Earned Income Tax Credit (EITC)

Montgomery County Executive Douglas M. Duncan today joined House Ways and Means Committee Chairman Sheila E. Hixson in announcing State legislation to expand Maryland's refundable Earned Income Tax Credit (EITC) to 50 percent of the federal EITC. The refund is currently at 12.5 percent and is scheduled to increase to 15 percent in 2001.

"The Earned Income Credit (EITC) program is the single most effective anti-poverty tool available to us," said Duncan. "The legislation proposed by Delegate Hixson will help thousands of Marylanders who are working hard, but still having trouble making ends meet."

"In this time of great economic prosperity, it is extremely important that we provide additional rewards and incentives for the working poor," said Hixson. "Providing these increased benefits for taxpayers who need it most is certainly money well spent."

The Earned Income Tax Credit is a tool used by the federal government, Maryland and other states to increase the incomes of the working poor and to reduce the tax burdens of low wage earning households. Studies from around the country report that the EITC helps work pay for those earning the lowest wages and is an effective way to help alleviate poverty.

"The EITC is one of the most important social programs we have. It rewards work by providing assistance to the working poor, who perform some of the toughest jobs in our society for little pay," said Congressman Albert R. Wynn. "It is a way to raise the standard of living and quality of life for thousands of hard-working Americans."

Maryland's refundable EITC program offers low-income taxpayers a refundable credit up to 12.5 percent of the federal EITC. The change introduced by Hixson would mean a family of four (two parents, two children) earning the poverty level annual income of $16,700 could see their refundable credit increase from $188 to $1,211. For the same size family earning only $10,300, their refund could increase from $572 to $1,908. For tax year 1998, 118,619 taxpayers requested the refund for a statewide cost of $19.9 million.

In October 1999, Duncan signed into law the nation's first local refundable EITC providing eligible taxpayers with a local refund that matches the amount they receive through the State program. Local refund checks were mailed recently to 12,322 Montgomery County residents. If Hixson's bill becomes law, Montgomery County would match the increased State refund dollar for dollar.

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