Montgomery County Councilmember Hans Riemer today introduced a bill to increase the County’s local Earned Income Tax Credit (EITC), which is called the Working Families Income Supplement. Councilmembers Marc Elrich and George Leventhal are co-sponsoring the bill.
Originally created in 2000, the Working Families Income Supplement was set at 100 percent of the state’s EITC for 10 years. In 2010, the County Council changed the law to allow the supplement to be set at a lower amount due to a “fiscal crisis” and “severe reduction in revenue.” Bill 8-13 would return the supplement to a 100 percent match in three years. An amendment by Councilmember Leventhal would allow the Council to waive the policy by super-majority vote, preserving flexibility during fiscal emergencies.
“Many families struggle to make ends meet in Montgomery County and for the lowest income families the challenge is even greater,” said Councilmember Elrich. “The County’s Working Families Income Supplement, in concert with State and Federal components, improves the ability of families to meet the cost of necessities. With improvements in the County’s fiscal outlook, we are able to begin to undo some of the damage the last few years have done to our safety net programs and the Working Families Supplement is one of the most effective and direct forms of assistance in our toolbox.”
Dating to 1975, the federal EITC extends tax credits to working people with low incomes. Eligible recipients can have incomes as high as $46,227 (or $51,567 for married people filing jointly) with three or more qualifying children. The Center for Budget and Policy Priorities estimates that the EITC kept 6.25 million people above the poverty line in 2010. An academic literature review by the National Bureau of Economic Research finds “overwhelming evidence [that] the EITC encourages work among single mothers” by increasing their after-tax incomes. Another study by the Brookings Institution finds that the EITC “has grown to be called the nation’s largest federal anti-poverty program” and “has had significantly beneficial effects for its recipients and their communities. These include encouragement of work, reduction of poverty, and boosting of local economic activity.”
“The Working Families Income Supplement is the most effective means we have of reducing the prevalence of poverty in Montgomery County, especially among children,” said Councilmember Leventhal. “There can be no question that the supplement succeeds in its primary objective to encourage people to work more hours and transition off of welfare, but it also provides a host of ancillary benefits such as a short term safety net, improving children’s school performance, and improving health outcomes for children and their parents alike.”
While 22 states and the District of Columbia provide EITCs, New York City and Montgomery County are the only local jurisdictions that provide them. In 2011, the county had 33,840 recipients comprising nearly 10 percent of its households. The average payment to recipients was $381.81. A full restoration of the supplement would bring the average payment level to greater than $500 and could make a crucial difference in the lives of many County residents.
“I’m pleased to be working with Councilmembers Elrich and Leventhal on this bill,” said Councilmember Riemer. “They have been champions of the county’s working class for many years. Councilmember Leventhal has been recognized for his work on housing and health care, while Councilmember Elrich has been working for renters for decades. Together, we can continue their efforts to make life easier for County residents who depend on our EITC.”
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