On Monday, House Bill 592, to establish a state Earned Income Tax Credit (EITC), passed the House Taxation Committee with a strong bipartisan vote. Today, the full House of Representatives will vote on one of the most effective anti-poverty programs. With a positive floor vote, Montana will be one step closer to joining the 26 other states that have enacted a statewide EITC.
During the committee hearing, some individuals gave personal testimonials in support of HB 592, highlighting the ways in which the federal EITC has already helped working families in Montana. Supporters called for a state EITC to further support the 80,000 low-and-moderate income households who are working hard but still struggling to make ends meet.
One Helena grandmother detailed how receipt of the federal EITC afforded her the “means to pay for necessary items like vehicle maintenance and upkeep, home maintenance, day care, and supplemental education.” These are necessities for her and her granddaughter. She is not alone. Studies show the majority of recipients use benefits to cover short-term costs like bills, groceries, and school supplies. Many individuals reported using their refunds to fix or maintain their cars in order to have a safe and reliant way to get to work, another indication that the EITC encourages work among recipients.
Others testified that EITC benefits go beyond families as dollars are spent in communities and help support local workers and economies. A great point! In fact, the federal EITC injected $151 million dollars into the Montana economy in 2012. Enacting a state EITC would contribute another $8.5 million each year.
Fingers crossed for a positive vote on the House floor today. Expanding a state EITC help support our economy and would support low-income-and-moderate families in Montana by effectively raising their wages, improving job security, and enabling them to rise beyond poverty.
MBPC is a nonprofit organization focused on providing credible and timely research and analysis on budget, tax, and economic issues that impact low- and moderate-income Montana families.