Governor’s new tax math has promise

Gov. Peter Shumlin has called for a cut in the state earned income tax credit to fund his proposal to expand child care for low-income families. Vermont’s earned income credit is piggy-backed onto the federal Earned Income Tax Credit: the state credit is 32 percent of the federal. Both are aimed at helping poor Vermonters who are working in low-wage jobs. The governor wants to reduce the state credit by two-thirds, but he put a different spin on the cut in his Budget Address:

“Our proposal would mean that an average eligible recipient with no need for childcare would see a fifteen percent reduction in the combined federal/state payment . . . .”

Interesting calculus. Perhaps the Legislature should apply that analysis to other funding sources.

The governor is looking for $17 million in revenue for expansion of child care. Vermonters with incomes of $200,000 or more paid over $750 million in state and federal income taxes in 2010. Their combined federal/state payment would need to increase a very small amount—only 2.2 percent—to generate an extra $17 million.