Here’s an idea for Charlie Baker: Congress is now considering a bill that would make permanent many tax credits and deductions that are now only temporary. How about supporting President Obama’s threat to veto that legislation because it fails to extend expansions of the Earned Income Tax Credit program?
A quick recap: this tax bill was negotiated between House Republicans and the office of Democratic Senator Harry Reid (who will no longer be the Senate majority leader when the Republican majority takes over in January). The $440 billion worth of tax breaks that it would make permanent include some programs that are popular with Democrats as well as Republicans, such as the American Opportunity Tax Credit for higher education costs, but two thirds of the tax benefits in the bill would go to businesses. Last week, President Obama threatened to veto the bill because it does not give permanent status to expansions of certain tax provisions, including the Earned Income Tax Credit Program, that are important to low-income families with children. In a provocative display of candor, the Republican negotiators said that the exclusion of the Earned Income Tax Credit program from the bill was “payback” for the president’s executive order on immigration.
The EITC expansions at issue were put into place five years ago, as part of the economic stimulus bill to counter the Great Recession. They provide, for example, a higher credit for larger families (those with 3 or more children). The expansions are scheduled to expire in 2017, and if they do, the credit for these larger families will fall by more than $700 per year. According to the Center on Budget and Policy Priorities, allowing the expansions to expire will push a quarter-million Massachusetts residents into poverty or make them poorer.
Allowing these expansions to expire would affect not only the federal EITC program, but also the 25 state EITC programs that provide some portion (currently 15 percent in Massachusetts) of the taxpayer’s federal credit. Which is where the Governor-elect comes in. Baker’s campaign platform proposed to increase the state’s EITC program — a more specific anti-poverty agenda than anything his opponent offered. (It must be said, however, that Baker was most likely to talk up this idea when campaigning in urban areas and communities of color. In the rest of the state, one heard far less about this “carrot” of encouraging work and far more about the “stick” of welfare reform.)
Given the state’s current budgetary red ink, it will be challenging enough to deliver an increase in the state EITC program. If the federal EITC expansions expire, any state increase would go in part toward making up for those federal cuts. So maybe Governor-elect Baker will repeat, for the benefit of the Republicans in Congress, what he told the Globe the day after his election:
“I would hope that one of the lessons that some of the Republicans nationally would take from this race is that it’s a good idea to chase 100 percent of the vote and to make the case in as many forums and as many places as they possibly can.”
Send them back to the drawing board to include the EITC. How about it?