BOSTON- Senator Eldridge (D-Acton) today voted to pass an increase in the state’s Earned Income Tax Credit designed to help working families. The Senate also passed an increase in the state’s personal tax exemption, guaranteeing that everyone in Massachusetts will receive an income tax reduction in the next year.
“Increasing the EITC is the most effective anti-poverty tool for hardworking families in the Commonwealth,” said Jamie Eldridge. “As a former co-chair of the Asset Development Commission, I recognize the need to address financial instability that an ever-growing number of Massachusetts families face. Expanding the EITC is one of the most powerful ways of helping families get — and stay – out of poverty and achieve economic stability.”
“The Senate approved a tax credit today equal to the cost of the reduction of the income tax from 5.15% to 5.10%. Increasing the EITC is an effective way to help working families move up the economic ladder while also beginning to address income inequality. By increasing the personal exemption to help those who don’t qualify for the EITC, we’re ensuring that everyone in the Commonwealth gets a tax cut,” said Senate President Stan Rosenberg (D-Amherst). “Together, these changes prioritize rewarding work over wealth and stimulate our economy by putting more money back into the pockets of working families.”
“With these changes, the Massachusetts State Senate has proven its dedication to tackling income inequality and supporting a more fair economy,” said State Senator Michael J. Rodrigues (D-Westport). “These policies reward hard work and support the Commonwealth’s working and middle classes, while not putting any additional burden on the State’s budget. I consider the Senate’s adoption of these tax changes to be a major step forward.”
“Increasing the EITC is crucial for our economy,” said State Senator Benjamin B. Downing (D- Pittsfield). “It rewards work and it helps lift working people out of poverty. This measure isn’t about being ‘for’ or ‘against’ tax cuts – it’s about how they get delivered. The Senate’s proposal ensures they are delivered in the fairest way.”
Both changes were passed as part of the $38.01 billion Senate budget, which the Senate began debating this afternoon. The amendment was sponsored by Rodrigues and Downing. Rodrigues serves as the Senate chair of the Joint Committee on Revenue, a post formerly held by Downing in 2009-2010.
The tax cuts are revenue neutral, and will be paid for by freezing at 5.15% the state’s income tax, which was scheduled to decrease to 5.10% next year if certain triggers are met. By freezing that tax cut and channeling the money back to those who need it most, the Senate hopes to reverse the troubling trend of wage stagnation which has plagued working families for decades.
The current Massachusetts Earned Income Tax Credit is 15% of the Federal program, which equates to an average of $315 per recipient. Under the Senate plan, the state match will increase to 22.5% of the Federal program over three years, a 50% increase in the state EITC or an average of $470 per recipient.
The amendment was passed by a vote of 29 to 11. Once the Senate completes its budget deliberations, a joint conference committee will be formed, tasked with reconciling the differences between the final House and Senate budgets. Fiscal Year 2016 begins on July 1, 2015.