Gov. Ned Lamont’s administration mailed out nearly 248,000 checks to low-income households this past weekend — the second time in the past two months a state tax cut delivered tens of millions of dollars to Connecticut families.
The governor and his fellow Democrats in the legislature’s majority hailed the $42 million mailed out Friday and Saturday through the Earned Income Tax Credit Enhancement Program, noting it will help some of Connecticut’s poorest working families.
But Republicans called it the latest in a series of election-year gimmicks.
The EITC enhancement and other relief measures this summer and fall “are some of the ways that our governor and legislature have tried to make living, working and raising a family in Connecticut a wonderful experience for all our residents and taxpayers,” said Department of Revenue Services Commissioner Mark Boughton, whose agency issued 247,655 checks to households that earned less than $57,414 in 2021.
The payments represent a compromise between Lamont and progressive Democrats on the Legislature’s tax-writing panel.
The Finance, Revenue and Bonding Committee wanted to boost the value of Connecticut’s state income tax credit for the working poor from 30.5% of the federal EITC to 41.5% starting with the 2022 tax year — involving returns to be filed in early 2023.
The administration, however, cautioned legislators against locking in too much relief right away. Lamont instead supported a larger state tax credit for working poor households — but not until returns are filed in early 2024.
But he effectively agreed to start the program even earlier — by spending federal dollars rather than cutting state income tax receipts.
The compromise specifically called for more than $42 million in emergency coronavirus pandemic relief to be sent this fall to working poor families that qualified for the EITC with the returns filed in the spring of 2022.
The average check sent to each household this past weekend was roughly $170.
Those payments came about eight weeks after the state launched an income tax rebate program for low- and middle-income households with children.
More than 196,000 income-eligible families received $250 per child, up to a maximum of $750.
And earlier this month, Lamont announced he would provide $1,000 “appreciation bonus payments” in early November to thousands of child care workers to bolster an industry in crisis.
Candelora: Democratic tax relief is ‘superficial and sloppy’
But the top Republican in the House of Representatives called these measures “superficial and sloppy” efforts to buy votes for Lamont and the legislature’s Democratic majority as they seek reelection this fall.
Throughout the summer and fall, Democrats have touted the $660 million tax relief package they enacted in May, noting it’s one of the largest in state history.
But Republicans, who proposed more than $1 billion in tax relief, including the first state income tax rate cut since the mid-1990s, say the Democratic relief is modest compared to the massive surpluses state government has run up. Connecticut closed last fiscal year on June 30 with an unprecedented $4.3 billion surplus, and early projections from the governor’s budget office project a $2.3 billion cushion for the current year.
The tax relief also is modest, GOP leaders say, given the nation’s inflation rate topped 9% earlier this year and still exceeds 8%.
With the Lamont administration doling out checks in August and October, “I believe the entire budget was created for a campaign, as opposed to for the residents of Connecticut,” Candelora said.
“I am so glad to learn that Gov. Lamont is finally listening to my calls for relief for the working families of Connecticut, but I do find it interesting that checks will arrive days before the election when the governor had all summer to do it,” said Republican gubernatorial candidate Bob Stefanowski.
Lamont spokesman Anthony Anthony said the administration “is putting money back in taxpayer’s pockets as was agreed upon when the budget passed. The fact that it is being politicized by the same legislators who voted against financial support in the first place is an unfortunate and cynical political game. The checks that have gone out over recent months make a difference in the lives of our small business owners, middle-class families and workers.”
But Candelora said the timing of the tax relief isn’t the only evidence that it was crafted with the election in mind. The child tax rebate has proven to be very inefficient, he said, noting it will deliver far less money than planned.
Lamont and the legislature set aside $125 million for tax rebates to single parents with federally adjusted incomes below $100,000 and to couples making less than $200,000.
But households were forced to apply for the aid, rather than using existing tax data to identify most eligible households without an application process.
More than 238,600 households had claimed about $92.5 million or 74% of the $125 million appropriated for the program when the application period closed on Aug. 1.
And Boughton said last week that only $82.4 million had been distributed, though another 5,000 applications filed before the deadline still remain under review.
But there’s another inefficient element to this program, Candelora noted.
Those rebate checks still count as taxable income that must be reported to the federal government. That means Connecticut parents, collectively, could lose millions of dollars in rebates to Washington.
Rep. Sean Scanlon, D-Guilford, who co-chairs the legislature’s Finance Committee and who is running this fall for state comptroller, had proposed an ongoing state income tax credit — and not a one-time rebate — for Connecticut households with kids.
Scanlon said Candelora’s arguments simply are wrong.
The Democratic relief plan, which also includes a gasoline tax holiday, an ongoing state income tax cut to offset local property tax bills, and a statewide freeze on local car taxes at 32.46 mills, targeted low- and middle-income families, he said.
Nearly all of the relief, Scanlon added, stems from proposals that have been in the works long before the 2022 state campaigns took off.
“These are not things we cooked up in 2022,” Scanlon said, “these are policies that people have been fighting for … for many years.”