Public Assets Institute > Policy Areas > Family Economic Security > Governor would take from the poor
to give to the poor

Governor would take from the poor
to give to the poor

For the second time in recent weeks, Gov. Peter Shumlin has proposed balancing the state budget on the backs of some of Vermont’s poorest citizens. With the latest move, the governor who says he’s adamantly opposed to raising broad-based taxes would effectively raise income taxes on those in the lowest income brackets. Vermonters shouldn’t stand for this.

In his second Inaugural Address on Thursday, the governor laid out a series of proposals aimed at strengthening education of Vermont’s children. One of those proposals, which he described as “the largest single investment in early childhood education in Vermont’s history” would cut the state’s earned income tax credit by $17 million in order to fund expansion of Vermont’s program to support child care services for low income families.

The Earned Income Tax Credit (EITC) is a federal credit available primarily to working families with children. It reduces the family’s income tax liability. It is also refundable, which means if the credit amount is more than the family owes in income taxes, the family will get a refund. Vermont is one of 25 states that supplement the federal EITC. The Vermont credit is 32 percent of the federal credit amount, and it is also refundable. According to the most recent Tax Expenditure Report, Vermont’s earned income credit was estimated to cost $28 million in fiscal 2012.

The governor proposed to “redirect” $17 million—about 60 percent—of the earned income credit to increase the child care subsidy Vermont offers to low-income families. In other words, he’s proposing to increase income taxes on certain low-income families in order to increase support for low-income families needing child care.

In December, the governor said the state didn’t have the money to help low- and moderate-income Vermonters who will see their health care costs rise under Obamacare. Vermonters currently enrolled in two state-supported health care plans, Vermont Health Access Plan (VHAP) and Catamount, face higher out-of-pocket costs when Obamacare takes effect in 2014. The governor said the state couldn’t afford the additional cost, which means it will fall on those least able to pay.

In his Inaugural Address, the governor was right on the mark when he talked about the importance of investing in Vermont’s children. Such an important investment should be worth raising some additional money from a broad base of Vermonters.  After all, every Vermonter benefits from this investment.

But if the governor is going to insist on a zero-sum game and take from one group of Vermonters in order to “invest” in another, he should look elsewhere for the child care money. Vermont’s business tax credits would be a good place to start. The EITC was created to reduce poverty, and it’s been a great success. The same can’t be said about business tax credits and jobs.

Posted by Jack Hoffman on January 11, 2013 at 4:27 pm

6 Responses to “Governor would take from the poor
to give to the poor”

  1. Ellen Oxfeld says:

    You are right. I have already sent an email to the Governor’s office about this.

    It makes no sense to take funds from the poor and redirect them to another program for the poor. If childcare subsidies for low income people are important (which they are), let’s not ask the same group of people to pay for them. How does that help anyone?

    I hope the relevant committees in the Senate and the House will have the same reaction I have heard from everyone else — this just does not make sense.

  2. Pat Heffernan says:

    Jack,
    After years of yearning for just such a commitment to early education, my heart sank when I heard what the proposed funding source was.

    A few questions for you:
    1> Do you know the family profiles of those receiving the VEITC, or where to find that data? (Is it the same families as those eligible for child care services, or a different group?)
    2> Do you have specific business subsidies in mind that can generate enough money?

    Thanks, ~ Pat

  3. Geoffrey Cobden says:

    Once again, this governor shows his true colors. Even in the face of huge budget cuts due to deficits and a letter signed by 50 of Vermont’s wealthiest citizens asking to be taxed more based on income, he wouldn’t budge. Now, he proposes to take revenue from the one program that allows low income people to earn almost enough to live on while working lower wage jobs. What will he do next? Take away food stamps to pay for school lunch for all?

  4. Peg Martin says:

    Proposals to allow unionizing child care workers and the Governor’s suggested vehicle for increasing preschool education just might result in a thorough and reasonable Legislative consideration of early programs for children. Let us hope so! Vermont has an existing, unique, well established and generally excellent group of preschool programs. It is important to build on these existing programs as well as to establish new ones in conjunction with school systems. It would be a big step backwards to put all/most preschool programs into the school systems in order to add to a diminishing school population. Let’s do this right for youngsters as well as for the future of Vermont.

  5. Jack Rogers says:

    Hey Hey…Insanity as usual..Gov Shumlin is the problem…I do not trust him at all…..

  6. [...] Advocates across Vermont this week voiced strong opposition to Gov. Peter Shumlin’s plan to take $17 million from the state’s EITC to finance an increase in childcare subsidies. Since Vermont’s EITC provides roughly $25 million each year to help about 45,000 low- and middle-income working families make ends meet, Shumlin’s plan would cut support for these working families by more than half. (VPR News, The Brattleboro Reformer, Public Assets Institute) [...]

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