2 lawmakers hope to use budget surplus to aid working poor

Proposals would increase earned income tax credit by differing amounts

February 10, 2000|By William F. Zorzi Jr. | William F. Zorzi Jr.,SUN STAFF

Hoping to take advantage of Maryland's record surplus, two key lawmakers are proposing to increase the amount of money returned to the working poor under the state's earned income tax credit program.

Del. Sheila E. Hixson, who chairs the House Ways and Means Committee, said yesterday she will introduce legislation to refund more money to low-income families under a formula based on their federal tax return.

"In a time when obviously there's so much money, the people who need it the most should benefit," said Hixson, a Montgomery County Democrat.

Sen. Barbara A. Hoffman, the Baltimore Democrat who chairs the Senate Budget and Taxation Committee, also wants to send more money to the working poor, though her proposal is more modest than Hixson's.

Under the state's formula, which considers family size, income and other factors, Maryland gives low-wage families a credit that reduces or eliminates their state tax bill. A second credit, added two years ago, allows the lowest-income taxpayers to receive a cash payment from the state if their credit is more than the taxes owed.

The refundable credit is 12.5 percent of the taxpayer's federal credit this year and is scheduled to be increased to 15 percent next year.

Hoffman wants to make the credit 15 percent this year while Hixson wants to increase it to 50 percent.

At a news conference yesterday, religious and business groups and advocates for the poor turned out to show their support for Hixson's ambitious proposal, which would cost the state $173 million in the current tax year.

In 1998 -- the first year of the refundable credit, which was then 10 percent -- 118,619 taxpayers requested the refund, at a cost of $19.9 million.

Under Hixson's plan, a family of four earning the poverty level income of $16,700 could see its refund increase from $188 to $1,211, according to estimates prepared for the delegate by Montgomery County officials.

House Republicans said they would consider supporting an increase in the credit, though they added that Hixson's plan seemed too costly.

"I'd be willing to listen," said Del. Robert L. Flanagan, a Howard County Republican. He added, "I think the priority should be to give money back to the people who actually pay taxes."

Nevertheless, he said, "There are some legitimate policy considerations where the earned income tax credit would be a legitimate part of the whole program of moving people from welfare to work."

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