Governor Shumlin’s plan to transfer $17 million from the state’s Earned Income Tax Credit program to pay for his child care initiative is under fire in the Senate.
Shumlin is looking to the Senate to keep his plan alive because it was rejected by the House last month.
The EITC is a federal program and Vermont matches 32 percent of a household’s federal credit. The program is designed primarily to assist low income working people with children.
For instance, a single parent with two children, with an income less than $40,000, could qualify for a maximum federal tax credit of just over $5,000.
The state would then provide a 32 percent match or roughly $1,600 dollars. Under Shumlin’s plan, the state credit would be reduced by $1,000.
According to the National Conference of State Legislatures, last year 45,000 Vermont households qualified for the program. The average federal credit was $1,800 and the average state credit was $574.
Shumlin says Vermont’s matching program is too generous in difficult budget times.
"27 states choose not to match at the state level at all. Vermont is the state that has the second most generous match in America," said Shumlin. "It’s gone up, the overall commitment to that has gone up 49 percent in the last 8 years because it’s indexed to the federal program."
Shumlin denies that he’s taking money from low income working people to pay for his child care initiative – instead he says he’s "reallocating" these funds.
"The piece of the argument is just dead wrong," said Shumlin. "People speak about this as if we’re asking low income people to pay for it. The Earned Income Tax Credit is paid for by all the other taxpayers in the state of Vermont just like any program to help people out of poverty."
Chittenden Senator Tim Ashe is the chairman of the Senate Finance committee. He didn’t like the Governor’s plan back in January and he likes it even less today.
"My thoughts haven’t changed in fact they get stronger each time the governor tries to justify going after that money."
Ashe says he’s stunned that Shumlin opposes income tax increases for wealthy people at the same time that he’s asking low income working people to pay for his child care proposal.
"It is impossible to say that someone making $20,000 a year can fork over a thousand and somebody making $200,000 can’t," said Ashe. "It’s just beyond the pale."
The Senate Finance committee is expected to draft a revenue package for next year in the next few weeks, and if Ashe has his way, the cut to the EITC program won’t be part of it.