Governor Ned Lamont’s administration sent nearly 248,000 checks to low-income households last weekend – the second time in the past two months a state tax cut has netted tens of millions dollars to families in Connecticut.
The governor and his fellow House Democrats hailed the $42 million sent Friday and Saturday through the Earned Income Tax Credit Enhancement Program, noting it will help some of the hardest working families. Connecticut poor.
But Republicans called it the latest in a series of election-year gimmicks.
Improving the EITC and other relief measures this summer and fall “are some of the ways our Governor and our Legislature have tried to make living, working and raising a family in Connecticut a wonderful experience. for all of our residents and taxpayers,” the Department of Revenue said. Services Commissioner Mark Boughton, whose agency issued 247,655 checks to households earning less than $57,414 in 2021.
The payments represent a compromise between Lamont and progressive Democrats on the Legislative Tax Drafting Committee.
The Finance, Revenue and Bond Committee wanted to increase the value of Connecticut’s state income tax credit for the working poor from the federal EITC’s 30.5% to 41.5% from the 2022 tax year – involving returns to be filed in early 2023.
The administration, however, has warned lawmakers against blocking too much relief immediately. Lamont instead backed a larger state tax credit for working poor households — but not before tax returns are filed in early 2024.
But he actually agreed to start the program even sooner — spending federal dollars rather than cutting state tax revenue.
The compromise specifically called for more than $42 million in emergency coronavirus pandemic relief to be sent this fall to working poor families who qualified for the EITC with returns filed in the spring of 2022.
The average check sent to each household last weekend was around $170.
The payments came about eight weeks after the state launched an income tax rebate program for low- and middle-income households with children.
More than 196,000 income-eligible families received $250 per child, up to a maximum of $750.
And earlier this month, Lamont announced it would pay out $1,000 in “appreciation bonuses” in early November to thousands of child care workers to support an industry in crisis.
Candelora: Democratic tax relief is ‘superficial and sloppy‘
But the top Republican in the House of Representatives called the measures a “superficial and sloppy” effort to buy votes for Lamont and the Democratic majority in the legislature as they seek re-election this fall.
Throughout the summer and fall, Democrats have been touting the $660 million tax relief package they passed in May, noting it’s one of the biggest of the history of the state.
But Republicans, who have offered more than $1 billion in tax relief, including the first income tax rate cut since the mid-1990s, say the Democratic relief is modest compared to the massive surpluses that the state government has accumulated. Connecticut ended the previous fiscal year on June 30 with an unprecedented $4.3 billion surplus, and early projections from the governor’s budget office call for a $2.3 billion cushion for the current year. .
The tax relief is also modest, according to GOP leaders, given that the country’s inflation rate topped 9% earlier this year and is still above 8%.
With the Lamont administration handing out checks in August and October, “I believe the entire budget was created for a campaign, as opposed to people in Connecticut,” Candelora said.
“I’m so happy to hear that Governor Lamont is finally heeding my pleas for help for Connecticut’s working families, but I find it interesting that the checks are coming days before the election when the Governor has had all the been to do it,” said Republican gubernatorial candidate Bob Stefanowski.
Lamont spokesman Anthony Anthony said the administration is “putting money back into taxpayers’ pockets, as agreed when the budget was passed.” That it is being politicized by the same lawmakers who voted against financial support in the first place is an unfortunate and cynical political game. The checks that have been issued over the past few months are making a difference in the lives of our small business owners, middle class families and working people.
But Candelora said the timing of the tax relief isn’t the only evidence it was designed with the election in mind. The child tax refund has proven to be very inefficient, he said, noting that it will bring in far less money than expected.
Lamont and the legislature set aside $125 million for tax refunds for single parents with federally adjusted incomes below $100,000 and couples earning less than $200,000.
But households were forced to apply for the aid, rather than using existing tax data to identify most eligible households without an application process.
More than 238,600 households had claimed approximately $92.5 million, or 74% of the $125 million allocated to the program as of the close of the application period on August 1.
And Boughton said last week that only $82.4 million had been distributed, although another 5,000 applications filed before the deadline were still under review.
But there is another ineffective element to this program, Candelora noted.
These refund checks still count as taxable income that must be reported to the federal government. That means Connecticut parents, collectively, could lose millions of dollars in rebates to Washington.
Rep. Sean Scanlon, D-Guilford, who co-chairs the Legislature Finance Committee and is running for state comptroller this fall, had proposed an ongoing state income tax credit — and not a one-time refund – for Connecticut households with children.
Scanlon said Candelora’s arguments were simply wrong.
The Democratic relief package, which also includes a gas tax waiver, a continued state income tax cut to offset local property tax bills, and a local tax freeze on cars at 32.46 mils statewide, targeted low- and middle-income families, he said.
Almost all of the relief, Scanlon added, stems from proposals that were in the works long before the start of the 2022 state campaigns.
“These are not things that we concocted in 2022,” Scanlon said, “these are policies that people have been fighting for…for many years.”