Tag Archives: Earned Income Tax Credit

Corporate Welfare

Senators for Corporate Welfare

The General Assembly couldn’t manage to pass an increase in the Earned Income Tax Credit (EITC) even though both houses supported it. In contrast, the bill giving Northrup Grumman a $37.5 million tax credit sailed to passage.

Who in the Maryland Senate supported this fine example of corporate welfare?

One Republican Against Corporate Welfare

Just about every Republican voted for the bill. Sen. Michael Hough (R-4) was the sole Republican who voted no, possibly because he is a conservative who (1) wants a simple tax code, (2) doesn’t think government should interfere in the free market by helping out only favored businesses, and (3) wonders why his tax paying constituents shouldn’t get the break instead of Northrup Grumman.

Democrats for Corporate Welfare

Nineteen Democrats joined the twelve Republicans who voted for the bill. The following chart lists them in decreasing order of support for Democrat Anthony Brown in the last election:

DforNGThough seven represent legislative districts that voted for Hogan, the rest hail from districts won by Brown. Nine of the 19 represent extremely safe Democratic districts. In these nine, Brown won by 59% or more, and all won election in 2014 by 62% or more.

Four more represent districts carried only narrowly by Brown (i.e. 50-52%). But even these senators do not face serious general election danger. Obama fared much better in the same territory, and Democrats won them by 57% or more in 2014 despite the terrible electoral fortunes faced by Democrats around the country.

Sen. Craig Zucker (D-14), recently appointed to replace retired Sen. Karen Montgomery, is tacking to the right of his predecessor. Besides voting in favor of giving money to Northrup Grumman, he also supported the tax cut for the wealthy. An interesting strategy as incumbent Sen. Rona Kramer lost to then-Del. Montgomery the primary after being attacked as too pro-business.

Dumb Politics

The politics of the legislation make little sense. It’s not even a question of alienating liberals. It’s hard to see how Democrats win more votes here from anyone. Are moderates, let alone liberals, really going to vote Democratic because Northrup Grumman received a tax giveaway?

The icing on the cake is that the Senate simultaneously killed off an increase in the EITC by standing firm in favor of a tax cut for the wealthy instead of for the middle class.

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General Assembly

EITC Increase Dies But Northrup Grumman Gets Corporate Welfare

One of the big battles of the General Assembly’s now ended legislative session centered around proposals to increase the Earned Income Tax Credit (EITC) and to cut taxes. Both the Senate and the House proposed an increase in the EITC. But while the Senate tied it to a cut in marginal rates for the top 11.1%, the House passed a broad based tax cut.

No EITC or Middle Class Tax Cuts

Conference negotiations resulted in stalemate, as the Senate held out for its tax cut on the wealthy. As a result, no tax cuts and no increase in the EITC. The political sense in the Senate’s position was lost on me. The Democratic-controlled Senate held the EITC hostage to a tax cut for the wealthy for which the Governor would inevitably claim all the credit. Bad policy and bad politics.

Don’t Worry, We Have Northrup Grumman’s Back

Meanwhile, the General Assembly passed a $37.5 million tax credit for Northrup Grumman. The Senate even voted down an amendment that proposed to make it nonrefundable. While the legislature made progress on other fronts, the General Assembly bombed the fundamentals on tax policy.

Heck, Republicans should have opposed this turkey too. If you really believe in the free market, then you should also believe that government should not pick winners and losers or give some businesses special treatment.

Sen. Rich Madaleno, who opposed the tax cut for the wealthy and the corporate welfare for Northrup Grumman, summed up the situation well in a tweet: “Sadly only Northrup Grumman gets expanded EITC.”

How Did They Vote?

That’s for tomorrow’s post.

 

 

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taxes

House of Delegates Tax Bill Vastly Superior

The Maryland Senate has passed a tax cut that is directed at the top 11.1% of taxpayers. It would reduce marginal tax rates for individual taxpayers who make more than $100,000 and joint taxpayers who make more than $150,000, while the people who earn less than this receive no cut in their rates and get peanuts – or more specifically, money enough to buy a meal at Chipotle.

In contrast, the House of Delegates has passed far superior tax legislation. Instead of focusing the benefits on wealthy Marylanders, the House bill would lower the marginal rates on income earned between $3001 and $100,000 (and up to $150,000 for joint taxpayers). The wealthy would still get a break but this bill, appropriately, directs far more of the benefit to the much-squeezed working and middle classes. Like the Senate bill, the House bill also expands the Earned Income Tax Credit (EITC).

Politically, it should be a no brainer to junk the Senate bill and adopt the House legislation, particularly for Democrats. While maintaining the EITC changes much needed by the working poor, the House bill distributes the tax cut far more widely and equitably. Let’s hope that the House and the Speaker stand firm.

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taxes

Who Supports the Senate’s Tax Cut for the Wealthy? Bueller? Bueller?

The Maryland Senate passed a cut in marginal tax rates that will only benefit the top 11.1% of Maryland taxpayers. It’s a tax cut that literally gives the wealthy enough to buy a nice iPad but leaves the middle class with barely enough to buy a meal for one at Chipotle (but they only get even that if they have exemptions).

The bill has crossed over to the House of Delegates. Lots of people and groups testified against the bill at the hearing before the House Ways and Means Committee, including:

Maryland CASH Campaign
Maryland Center on Economic Policy
Maryland Nonprofits
Health Care for the Homeless
Maryland State Education Association
Advocates of Children and Youth
Maryland Alliance for the Poor
League of Women Voters of Maryland
MD/DC State Council of SEIU
Maryland Working Families
AFSCME

The following groups also signed on to a letter protesting holding the increase in the Earned Income Tax Credit (EITC) hostage to a tax cut for high earners:

Advocates for Children and Youth
AFSCME Council 3
Baltimore CASH Campaign
Baltimore County Arts Guild
Baltimore Neighborhoods, Inc.
CAFÉ Montgomery
CASA of Baltimore County
Council for Bile Acid Deficiency Diseases
Fuel Fund of Maryland
Health Care for the Homeless
Job Opportunities Task Force
Laurel Advocacy and Referral Services
League of Women Voters of Maryland
Maryland CASH Campaign
Maryland Center on Economic Policy
Maryland Disability Law Center
Maryland Education Coalition
Maryland Nonprofits
Maryland PTA
Maryland State Education Association
Maryland Working Families
NAMI Maryland
National Association of Social Workers, Maryland Chapter
Pain Connection-Chronic Pain Outreach Center, Inc.
Public Justice Center
Progressive Maryland
SEIU Maryland Council
The Way Out Program

So who testified on the bill at the House Ways and Means Committee hearing?

Not Governor Larry Hogan. His office didn’t even bother to send anyone to support the tax cut for the wealthy.

In fact, no one testified in favor of the tax cut. Maybe the House should take that as a hint and shelve it.

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