County credits for poor urged

Montgomery executive makes proposal for earned-income plan

July 14, 1999|By Thomas W. Waldron | Thomas W. Waldron,SUN STAFF

Montgomery County would become the first locality in the nation to provide earned-income tax credits -- essentially supplemental payments -- to the working poor under a proposal advanced yesterday by County Executive Douglas M. Duncan.

Duncan, considering a run for governor in 2002, also called on the state to increase its tax credit for the working poor -- at a cost to taxpayers of up to $250 million a year -- and pledged that his county would match any increased payments for its residents.

"We're looking at what's the best way for the working poor to become more self-sufficient," said Duncan, a second-term Democrat. "The earned-income tax credit is probably the single best way to do that."

Federal law allows low-income working families to claim a credit higher than their tax liability, meaning those families receive a federal refund despite owing no taxes.

Under state law enacted last year, Maryland residents are eligible for a similar state refund equaling 10 percent of the federal payment, a figure that is to climb to 15 percent by the year 2001.

Duncan's proposal would have Montgomery County, one of the nation's most affluent localities, match the state credit -- at a cost to the county of $4.5 million in the year 2001.

That year, under the proposal, a family of four could receive a maximum county payment of $614, according to county officials. The average county payment for all qualifying families would be $332.

County officials estimated that more than 13,000 county residents earning less than $19,000 a year would qualify for the tax credit payment by 2001. Montgomery has more than 840,000 residents.

Duncan also called for the state to increase its credit to 50 percent of the federal payment over the next several years, despite the high cost.

"It's exactly the right time to look at that," said Duncan, referring to strong tax collections at the state and county level. "I was looking for things to slow down this year, but it keeps going."

This year, the Assembly rejected legislation introduced by Del. Sheila E. Hixson, a Montgomery Democrat, that would have increased Maryland's credit from 15 percent to 20 percent of the federal payment.

Del. Howard P. Rawlings, a Baltimore Democrat and chairman of the House Appropriations Committee, declined comment on Duncan's proposal, saying he needed more information. Aides to Gov. Parris N. Glendening did not respond to requests for comment.

Only eight states, including Maryland, have refundable earned-income tax credits, which allow payments to be made to poor families that have no tax liability.

"The earned-income credit is a wonderful policy tool, at the state level and also with what Doug Duncan is proposing," said Steve Bartolomei-Hill, director of the Maryland Budget and Tax Policy Institute, a nonpartisan think tank based in Silver Spring.

"But they're also limited as an anti-poverty tool, just because the benefits people receive can be very modest."

Bartolomei-Hill said he knows of no local governments that have an earned-income tax credit in place. New York City recently approved a credit equaling 5 percent of the federal credit, but that will not go into effect until the New York legislature gives its approval.

Duncan said his proposal does not need approval by the General Assembly.

His announcement came yesterday as the Montgomery County Council considers legislation that would require most companies that receive county contracts or economic incentives to pay their employees a "living wage" of $10.44 an hour, twice the federal minimum wage.

Duncan has said that the "living wage" legislation goes too far and would hurt redevelopment efforts in Silver Spring and elsewhere.

Duncan also proposed a package of $6.5 million in spending on child care and other services for low-income county residents.

Pub Date: 7/14/99

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