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During a year in which far too many tax proposals have been focused on cutting taxes for the affluent, and in some cases actually raising them on the poor, Montgomery County Maryland’s decision to expand its Earned Income Tax Credit (EITC) is very welcome news.
As we noted in August, Montgomery County’s EITC is just one of two local EITCs in the country (the other is in New York City). The credit is a powerful tool for blunting the regressivity (PDF) of Maryland’s sales and property taxes, and is an effective way to alleviate poverty, encourage work, and improve the long-term prospects of children raised in low-income families.
Unfortunately, when the Great Recession battered Montgomery County’s revenues, the County Council decided to scale back its EITC in order to help balance its budget. Rather than matching the state EITC dollar-for-dollar, the credit dropped as low as 68.9% of the state credit in Fiscal Year 2012, and stands (PDF) at 75.5% of the state credit for Fiscal Year 2013. Under a newly approved measure, however, that dollar-for-dollar match will gradually come back into effect by 2017.
As Councilman Hans Riemer explained, “Most of the services in the county have been restored from their cuts at the bottom of the recession. Except this one … So we are about back to where we were years ago.” Montgomery County’s decision to continue its long-running commitment to its poorest residents is one that officials in other states and localities would be wise to emulate.