January 2013

Connecticut's Earned Income Tax Credit: A Boost to Working Families in Every Town

Matt Santacroce and Wade Gibson

Connecticut’s Earned Income Tax Credit benefited 180,000 households last year, its first year of implementation. The report by the Fiscal Policy Center at Connecticut Voices for Children and the Connecticut Association for Human Services (CAHS) finds that working families in every town in the state benefited from the credit.  The average amount of the state tax credit was about $600, and households claiming the credit had average incomes of about $18,000 – what a single parent working full-time just above the minimum wage would earn before paying taxes.

The report, which includes town-by-town data on numbers of households claiming the credit, praised the benefits of the credit:

  • The EITC gets and keeps people working.  The credit can only be claimed by people who earn income through work, and is structured to encourage people to work more.
  • The EITC makes the state tax code fairer. The EITC was critical in balancing out the regressive impact of recent sales tax increases, which tend to hit low-and moderate-income residents hardest. People only receive the credit if they work and pay taxes, including federal payroll, state, and local taxes.
  • The EITC is a proven anti-poverty tool. The federal EITC lifts more children out of poverty than any other federal program.  In 2011, the federal EITC alone kept 61,000 people in Connecticut above the poverty line, including 35,000 children.

 

Issue Areas:
Budget and Tax, Family Economic Security