Senate approves EITC expansion, income tax freeze

BOSTON (STATE HOUSE) – The Senate voted 29 – 11 Tuesday afternoon in favor of a budget amendment that would expand the earned income tax credit for low-income families and the personal tax exemption for all taxpayers in an effort by Democratic leaders to address what they described as growing income inequality in Massachusetts.

While proponents argued in favor of the tax cuts to help grow the middle-class and address wage stagnation, Republicans chastised the leaders behind the effort for proposing to pay for the tax cuts by permanently freezing the income tax rate at 5.15 percent.

Senate Minority Leader Bruce Tarr, whose amendment to double the EITC without freezing the income tax failed, said Democrats were “breaking faith” with the voters who in 2000 approved a rollback of the income tax to 5 percent.

Democratic Sens. Michael Moore, James Timilty, Eileen Donoghue, Jennifer Flanagan and Ann Gobi joined with Republicans in opposing the amendment.

The amendment, sponsored by Sens. Benjamin Downing and Michael Rodrigues, would increase the earned income tax credit by 50 percent over three years to 22.5 percent of the federal credit, costing the state about $140 million in tax revenue, according to Senate aides.

The average benefit for recipients of the EITC credit would jump from $315 to $470 annually. The maximum value of the EITC would rise from $937 to $1,405. The amendment would also increase the personal tax exemption for all taxpayers regardless of income by $400 to $4,800 for single individuals and by $800 to $9,600 for families.

To make it into law, the House would need to agree to the Senate’s tax policy changes and they would need to be signed by Gov. Charlie Baker. The governor, who opposes higher taxes, and the House did not include any major tax increases or reductions in their budget proposals.

Copyright 2015 State House News Service

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