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Income Tax – Earned Income Tax Credit – Eligibility Awareness Campaign Pilot Program

HB762 (EITC Outreach) allows DHR to engage in targeted outreach for those who might qualify for Maryland’s EITC.  As you know, the Earned Income Tax Credit is one of the most successful anti-poverty programs in U.S. history. The EITC improves health outcomes for children and encourages work. In fact, one study shows that for every policy-induced increase in the EITC by $1,000, a  increase in employment occurs. Currently, over 400,000 receive the EITC in Maryland. Unfortunately, the rate at which eligible individuals claim the EITC is 79 percent nationally, and 76.4 percent in Maryland.

This policy seeks to create targeted EITC outreach by allowing information sharing between the Department of Human Resources and the Comptroller’s Office. It was amended to only apply to Baltimore City and Somerset County as a pilot, but it included $50,000 in funding for the project. We are happy to hear the bill is likely to pass! This is a small step, but could lead to significant improvements in EITC outreach that ensure that every eligible taxpayers receives the credit.

Earned Income Tax Credit – Individuals Without Qualifying Children – Expansion

SB14: Maryland should expand the state refundable EITC to keep low wage earners in the work force and on the path toward a more secure financial future.  SB 14 will alter the calculation of the Maryland earned income tax credit to allow individuals without qualifying children to claim an increased credit.  It expands the eligibility of the credit to allow individuals without qualifying children to claim the credit without regard to a specified age limitation.

For every dollar of the EITC, $1.24 is returned directly to the community.  In 2012, more than 398,000 Maryland residents filed and received a total of $931M in EITC Federal credits.  Families and individuals spend the EITC to pay bills (rent, utilities, etc.) and to meet their basic household needs (food, clothing, child care). Thus, the $931 million in federal EITC has been spent in communities statewide, boosting economic output, jobs, and tax revenue.

Too many working families and young adults depend on jobs that fail to pay wages that allow them to make their basic ends meet.  SB14 will reduce taxes for 355,000 more working Marylanders and put them on the path to financial stability.

Unfortunately, it is likely that our EITC expansion bill will not move forward this year. It appears the fiscal note is too high ($68 million) regardless of how we adjust the policy’s various components.