House OKs tax credit for poor

March 27, 1998|By Michael Dresser | Michael Dresser,SUN STAFF

The House of Delegates voted to give the working poor a share of the state's good fortune yesterday as it approved legislation making them eligible for a tax credit even if they don't pay taxes.

The proposal, which has been approved by the Senate in a less generous form, passed the House 106-30 over the objections of a majority of the Republican delegates. The two houses must work out their differences before the bill can go to the governor.

Both versions would make the state's earned income tax credit -- modeled on a similar federal benefit -- refundable if a family's credit amounts to more than taxes owed.

Under the House bill, eligible families could receive a state credit of up to 15 percent of their federal credit. The Senate bill limits the credit to 10 percent.

For a family of three with two children and one parent earning $10,712 -- the minimum wage for a year -- the credit under the House bill would be worth $447. Under the Senate bill, the same family would receive $260. The bills aim primarily to direct money to households with incomes of roughly $5,000 to $15,000.

All but five of the delegates who voted against the bill were Republicans, who split 25-16 against the tax credit.

Opponents argued that families of the working poor were actually ending up with more spendable income than the middle class when all social programs and tax breaks were considered.

"I believe in the helping hand, but I draw the line at a handout," said Del. James F. Ports Jr., a Baltimore County Republican.

But Democrats, led by Majority Leader John Adams Hurson, dismissed that argument as nonsense.

"If we're going to make welfare reform work, we're going to have to give them a little help when they go back to work," said Hurson, a Montgomery County Democrat.

Advocates for the poor have lobbied heavily for the bill, whose passage was aided by a $350 million-plus budget surplus that has allowed legislative leaders to propose tax cuts for virtually all Marylanders. Supporters contend that the working poor, while they pay little in income tax, pay a disproportionate share of their income in sales tax.

Gov. Parris N. Glendening has taken no position on the tax credit but has said he will keep "an open mind" on the issue.

Pub Date: 3/27/98

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