Connecticut Lawmakers Push For Tax Credit To Benefit Low-Income Households

May 4, 2021

Melissa Stanley was a young single mother of three when she moved to Stamford, Connecticut, 19 years ago to raise her kids. After leaving Yonkers, New York, she worked full time, tightened her belt and volunteered, when she could, at her kids’ after school activities.

“Finances have always been a challenge for me and other families with children,” she said. “I have struggled to make ends meet and lived paycheck to paycheck with little room for savings.”

Stanley, who is program director for the Boys & Girls Club of Stamford, said the expansion of tax credits being discussed in the Connecticut General Assembly would have helped her save more money and cover unexpected expenses.

“Even a few hundred dollars makes a difference when you have to make every dollar stretch,” she said.

Connecticut state lawmakers are proposing an increase of earned income tax credits from 23% to 30%. They also want to create a state child tax credit to help low-income families. The proposal includes $600 per child for up to three children for couples filing jointly earning up to $200,000 and single filers earning up to $100,000.

Stanley joined advocates and lawmaker on Monday, who said the tax credits would help support ALICE, or Asset Limited, Income Constrained, Employed households. The most recent report released by Connecticut United Way showed that 38% of the state’s households were in poverty or below the ALICE threshold in 2018.

“The best way that we can help revive Connecticut and get more people to come off of that ALICE factor is to help them live their life. And the best way we can do that is to cut their taxes, because they pay a disproportionate amount of taxes compared to those who are the wealthiest,” said Representative Sean Scanlon, the co-chair of the Finance, Revenue and Bonding Committee.

To pay for the plan, Democrats have proposed a consumption tax and increased tax on capital gains and income for the wealthy. Governor Ned Lamont is opposed to the tax increases, citing the $250 million state budget surplus and $6 billion federal as funds to mitigate the lost revenue.

State Senator Martin Looney, who sponsors this tax credit increase, disagrees.

“The reality is, we are going to have to get something on the books that’s going to help us avoid going off a cliff with programs that we may want to fund over the next two years with the combination of state and federal money,” Looney said. “We can not leave ourselves bereft of revenues when the federal revenue program ends.”

There is currently a push nationally to further expand the child tax credit. President Joe Biden named it a priority to extend the temporary tax credits implemented in his COVID-19 relief bill through to 2025 as a part of his American Family Plan. Congresswoman Rosa DeLauro (D-CT) wants to make it permanent. Several Republicans, including Senator Mitt Romney (R-Utah), are also pushing child benefit plans.

Looney said that the state tax credit, in tandem with the federal child tax credits and Connecticut’s minimum wage increase to $15 an hour in 2023, would have an enormous effect on Connecticut.

“All of those, in combination, I think will do more than anything we’ve been able to do in a long time to improve the plight of low income working people in our state,” Looney said.

Other members of the Assembly, including Scanlon and Representative Brandon McGee Jr., said they want to go further and increase the earners tax credit to 40%.

“The conversation that we are having today — it must be — it has to be centered in equity, centered on equity,” McGee said. “And if we truly seek to foster more inclusive and equitable communities in our state, then we must make a choice to invest in communities throughout the state, especially our Black, Brown communities that we have historically underinvested in.”

Bryce Covert, a contributing opinion writer for The New York Times and The Nation, told the panel that the tax credits can allow poorer families by necessities which aren’t covered by other government programs, like diapers, childcare and hygiene products.

Panelists discussed how the pandemic is shaping the conversation around ALICE households, who are often one crisis away from losing their livelihoods because of their lack of savings.

“A lack of steady, decent income means that many people work hard but are constantly on the brink,” Covert said. “If COVID proved anything, it's that too many Americans are one emergency away from financial devastation.”