AUGUSTA, Maine — Sarah Austin, policy analyst at Maine Center for Economic Policy, released the following statement regarding the unanimous enactment Thursday of a bill to expand Maine’s Earned Income Tax Credit, sponsored by Rep. Ryan Tipping of Orono.
“This vote is a huge win for low-income Mainers, who work hard but are held back by income inequality and the rising cost of living. Expanding Maine’s Earned Income Tax Credit will put more money in their pockets so they can make ends meet.
“This bill will more than double the EITC, increasing the incomes of roughly 100,000 households. What’s more, it pays for itself by closing a tax loophole that gives multi-state businesses an unfair advantage over Maine-based companies.
“In our out-of-balance tax code, the poor pay more than the wealthiest residents of our state. Expanding the EITC and closing this corporate tax loophole will make our lopsided state tax code a little more fair.”
BACKGROUND: LD 1671, “An Act To Amend the Laws Governing the Maine Capital Investment Credit To Ensure Fairness for Maine Businesses,” fixes an unintended loophole of the Maine Capital Investment Credit (MCIC) that provides disproportionately large benefits to businesses with out-of-state income, compared with companies who conduct all their business in Maine.
The bill uses the revenue generated by closing the MCIC loophole to expand Maine’s Earned Income Tax Credit, a refundable tax credit that gives low-income working people a larger refund when they file their Maine income taxes. The bill more than doubles Maine’s credit for working families, and expands eligibility to working, independent 18- to 24-year-olds without children.
Earlier this week, Gov. Janet Mills signed a related bill into law. The bill, LD 1491, sponsored by Rep. Mo Terry of Gorham, creates a working group to build on the strength of the EITC and other refundable tax credits for low-income households by combining those credits and allowing eligible Mainers to receive their refunds in periodic payments, rather than as one lump-sum during tax season.