AUGUSTA, Maine — Sarah Austin, tax and budget policy analyst at Maine Center for Economic Policy, released the following statement in reaction to the Taxation Committee’s unanimous vote Thursday for LD 1671 — a bill to expand the state’s Earned Income Tax Credit, paid for by closing an unintended loophole that benefits multi-state businesses operating in Maine:
“The Maine Earned Income Tax Credit is commonsense tax policy that recognizes and rewards work and makes it easier for low-income Mainers to make ends meet. That benefits individual families and our entire economy.
“Maine’s EITC is among the smallest in the country, and this expansion is long-overdue. LD 1671, as amended by the Taxation Committee, will more than double the credit for working families and benefit roughly 100,000 Maine households. It will also make our lopsided tax code, in which the wealthiest pay less than any other group, a little fairer for working families.
“This bill pays for itself by closing a loophole that allows multi-state corporations operating in Maine to pay lower taxes than our Maine-based companies that do business only within state borders. MECEP endorses this commonsense tax reform bill and urges the Legislature to enact it this year.”
The Legislature’s Taxation Committee on Thursday gave unanimous support to an amended version of LD 1671, “An Act To Amend the Laws Governing the Maine Capital Investment Credit To Ensure Fairness for Maine Businesses.” As amended by the committee, the bill would fix 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 would use 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 would more than double Maine’s credit for working families, and expand eligibility to working, independent 18- to 24-year-olds without children.
MECEP staff are available to answer any questions about the Maine Capital Investment Credit, the Maine Earned Income Tax Credit, or LD 1671.