Public Assets Institute > Policy Areas > Family Economic Security > New Report: Vermont EITC Not Too Generous

New Report: Vermont EITC Not Too Generous

April 11, 2013

MONTPELIER— New data from the IRS show that Vermont’s Earned Income Tax Credit (EITC) is not overly generous. In fact, the amount working Vermonters receive is only average.

According to a new report released today by Public Assets Institute, Vermont ranked 25th among the states and the District of Columbia in combined federal and state earned income credits in 2011.

“Much of the justification of the Shumlin administration’s proposal to cut the Earned Income Tax Credit is based on the claim that this tax credit is too generous,” said Paul Cillo, president of Public Assets Institute. “The new data included in our report show that that claim simply doesn’t stand up.

“The Earned Income Tax Credit has been an effective way to support hard-working Vermont families for 25 years,” Cillo continued. “Cutting the EITC in order to expand child care for low-income families is taking from the poor to give to the poor. Expanding child care is a good idea and will benefit the state. The governor just needs to find another way to fund the expansion.”

According to the Public Assets report, Vermont had the lowest average federal EITC among the 50 states and the District of Columbia in 2011. Twenty-four states, including Vermont, offer a state EITC that is typically a percentage of the federal credit. Vermont’s EITC currently is 32 percent of the federal credit. But the state credit, when combined with the federal credit, brings the total average credit for Vermont to the middle of the pack.

The governor has proposed to cut the Vermont EITC by two-thirds. According to the Public Assets report, if that cut had been in effect in 2011, the combined average EITC in Vermont would have ranked 47th in the nation.

The report, “Vermont’s Earned Income Tax Credit is Not Too Generous,” is available at www.publicassets.org.

 

Public Assets Institute is a nonprofit, nonpartisan organization that promotes sound state budget and tax policies that benefit all Vermonters. More information at www.publicassets.org

 

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