Connecticut Gov. Lamont to propose renewing earned income tax credit at historic level

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Gov. Ned Lamont will propose spending $75 million to keep the earned income tax credit at the highest level in state history.

Lamont said Friday that he has been meeting with his budget team to craft the proposal that will be unveiled to the state legislature on Feb. 9 as part of the fiscal adjustments in the second year of the two-year budget.

“We’re going to try and do what we did last year this year and raise the rate,” Lamont said on a Zoom call.

Using federal money unspent from the state’s allocation, Lamont retroactively changed the credit for the 2021 calendar year for more than 200,000 low-income households. The average family in the program will receive an additional $375 to bring their state total to as much as $1,000 for the year, depending on their income, officials said.

Lamont increased the state credit to 41.5% of the federal credit, which is the highest in Connecticut history by far. It jumped up from 30.5% — and would have reverted when the federal stimulus money runs out. But Lamont has made the credit among his budget priorities for the upcoming session that ends on May 4.

Lamont touted the credit Friday on a Zoom call with U.S. Rep. John B. Larson, an East Hartford Democrat who has pushed for the credit in Washington, D.C. Changes at the federal level have made it easier to receive the credit.

“If you’re single and under 65 and making less than $12,500, you’re eligible for the earned income tax credit,” Larson said. “If you’re single and over 65, you’re eligible for the earned income tax credit. ... In order to get this money, though, people have to file [a tax return]. That’s why the IRS has been pushing the awareness and why it’s vitally important.”

To be eligible, married couples with no children can earn up to $27,380 per year. Couples with two children can earn as much as $53,865 and those with three or more qualifying children can earn as much as $57,000 per year. Recent changes have included the maximum credit amount and the maximum income amount for childless filers. Childless seniors and young adults under 25 are also eligible. For 2021, filers can have as much as $10,000 in annual interest and dividend income from their investments, up from the previous total of $3,650.

“Nobody is getting wealthy with this money,” Larson said. “I don’t know how people are able to survive on that kind of money, but they do.”

The money is needed for daily expenses, advocates said, citing U.S. Census statistics that 33% of renters with children in Connecticut are not caught up on their rent.

In Connecticut, the credit amount has changed multiple times over the past 10 years, depending on the state’s budget fortunes and decisions by the legislature. The credit has gone from 23% to 30.5% and now to 41.5%.

House Republican leader Vincent Candelora and others have been concerned for weeks that Lamont had unilaterally boosted the credit without a vote by the legislature and without any input by Republicans.

“Instead of paying down the mountain of federal unemployment debt Connecticut businesses will have to pay back, the governor is using $75 million in federal aid to send checks to people who will already benefit from an Earned Income Tax Credit expansion included in the last budget,” Candelora said recently. “Given the growing excesses of Gov. Lamont’s promotional tour, it’s clear that his decisions are influenced more by a looming re-election campaign than a sense of duty to do what’s best for the state as a whole.”

For years, Connecticut had no state credit because it was blocked in the state legislature and had been opposed by Republican governors John G. Rowland and M. Jodi Rell. The measure was finally approved for the first time under then-Gov. Dannel P. Malloy in 2011.

Other states, advocates said, also have generous programs, including 40% in New Jersey. By 2023, the rate in South Carolina is expected to jump sharply to 125%, officials said.

Both Lamont and Republicans have been advocating for tax cuts this year at a time when the state budget surplus has surged to a projected $1.2 billion in the current fiscal year and $1.1 billion next year. A record-breaking streak on Wall Street — before severe volatility during the past week — has poured hundreds of millions of dollars into state coffers in capital gains taxes that are traditionally paid quarterly by wealthy investors through the state income tax.

Christopher Keating can be reached at ckeating@courant.com