Mayor John DeStefano Jr. kicked off the tax season yesterday by announcing his support for the establishment of a state-wide Earned Income Tax Credit at an event marking the beginning of the 2006 Volunteer Income Tax Assistance program.
DeStefano called upon the state legislature to create an EITC for Connecticut, currently the only New England state without a state-level program. For nearly a decade, advocacy groups have supported the program, which provides a tax break for low-wage workers, but its prospects for success in Hartford have been dim. But yesterday, DeStefano and Senate Majority Leader Martin Looney, a Democrat from New Haven, expressed optimism that state leadership had increased its support for the program, encouraged in part by a recently announced budget surplus.
“Everyone should have to work, but work should pay,” DeStefano said. “We need to keep that bargain … That’s what the EITC is about.”
DeStefano said the city will lobby in Hartford for the establishment of a state-level EITC. In addition to the federal-level EITC, state-level EITCs exist in 18 other states in the country.
The Yale College Democrats and the Yale student group Project Opportunity are also lobbying heavily for a state-wide EITC, Dan Weeks ’06 of Project Opportunity said. Weeks said a group of Yale students will meet on Friday with Philip Dukes, a policy advisor to Gov. M. Jodi Rell.
Looney said the idea of an EITC has significant support in the Senate Democratic Caucus, particularly because it is designed to assist primarily working people. Other states have passed EITC legislation with bipartisan support, including Massachusetts and New Jersey, both of which instituted the measure under Republican governors, Looney said. He said the EITC is particularly effective for economic development because most of the money given to families is spent in local communities.
“It is a stimulus to the economy because these people are on such a thin margin, they aren’t squirreling it away,” he said.
But Looney said the legislature is looking at a number of other ways to help foster job creation in Connecticut and is considering ways to alleviate the burden of property taxes for industry, which, he said, are a strong disincentive to new development and innovation.
According to the Mayor’s Office, nearly 12,000 New Haven residents, or 25 percent of those who filed taxes, qualified to receive the federal-level EITC in 2003, bringing more than $20 million into the city. Looney said he and his allies in the state legislature are hoping to set the state EITC at 20 percent. The mayor’s office has calculated that, set at 20 percent of the federal EITC, the state program would bring an additional $4 million into the city, mayoral spokesman Derek Slap said.
Michael Montano ’03, economic development programs coordinator for the New Haven advocacy group Junta for Progressive Action, said the VITA program, which provides free tax preparation for low-income individuals, is instrumental in helping eligible families claim their federal EITC money. Last year, the program assisted 600 people and helped them claim an average refund of $1,700.
“Obviously, no tax credit is going to be as effective as having a good job and health care in improving quality of life, but this tax program does help let people retain their hard earned money,” he said.
The VITA program expanded this year, and now offers tax preparation at six sites, up from two last year. The sites include the New Haven Free Public Library and the new Yale-Dixwell Community Center.