States balancing budgets by cutting tax credits for poor

As Connecticut considers establishing its first earned income tax credit for low-income working families, other states are going in the opposite direction, cutting or eliminating existing credits to help balance their budgets, Pamela M. Prah reports at

Currently, 23 states and the District of Columbia offer earned income tax credits based on a percentage of taxpayers’ federal tax credit. In Michigan, were the average credit is $432, Gov. Rick Snyder says eliminating that and other tax credits will make the state tax system “simple, fair and efficient.” It also will help the state close its $1.8 billion budget deficit.

States considering scaling back earned income tax credits include Kansas, North Carolina and Wisconsin; New Jersey reduced its credit last year.

In Connecticut, Gov. Dannel P. Malloy has proposed creating an earned income tax credit set at 30 percent of the federal credit. With an average federal benefit of about $2,000, the state credit would be worth an average of about $600. The proposal is now before the legislature’s Finance, Revenue and Bonding Committee.