April 4, 2013

Earned-income tax break passes Senate

By Michael Shepherd mshepherd@mainetoday.com
State House Bureau

AUGUSTA — A bill to double a tax credit for low- and moderate-income families passed the Maine Senate in a party-line vote Thursday.

But that 19-16 vote, which saw independent Sen. Richard Woodbury of Yarmouth, an economist, going with Republicans, suggests Democrats wouldn't be able to override a potential veto from Republican Gov. Paul LePage, who won't see the bill until later this year.

His party's legislators, except for two in the House, opposed the measure, which passed the House Tuesday.

The proposal would move the state earned-income tax credit from 5 percent to 10 percent of the federal standard. In the 2012 tax year, the maximum federal earned income credit for a family with two children was $5,236. That family must have made less than $47,162 if the married couple filed jointly, according to Internal Revenue Service data.

It is estimated that the Maine bill would cost the state nearly $68 million in revenue through 2017 and likely require hiring two new tax examiners.

The proposal would also make the credit fully refundable if the payer's tax burden is zero. Currently in Maine, the tax credit is partially refundable, according to the National Conference of State Legislatures.

Democrats have pitched the measure as a targeted tax break for working families.

“We need to think about the difference this could make to people who are working to keep their families safe, well fed, and in their homes instead of at a soup kitchen or in a shelter," said Sen. Anne Haskell, D-Portland, in a statement after the vote.

But on the floor, Sen. Douglas Thomas, R-Ripley, said the proposal's cost isn't appropriate in tough budget circumstances, which include a multi-million-dollar shortfall for the next two-year budget cycle.

"We just can't afford it," he said.

The bill will now head to the Legislature's Appropriations Committee, as it has a fiscal note attached to it. Senate Democrats spokeswoman Ericka Dodge said the committee will likely be voted out of committee and sent to Gov. Paul LePage near the legislative session's end in June. 

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