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HARTFORD — Democratic legislators, union representatives and nonprofits are pushing for an annual payment to Connecticut families with children.
A state Senate bill proposes a $50 tax credit per child beginning in July, increasing up to $600 per child over the next four years. Single adults making up to $100,000 and couples making up to $200,000 would be eligible for the credit.
“This proposal would go a long way in providing tax relief for working families in Connecticut as a companion to our state earned income tax credit,” said State Sen. Martin Looney, D-New Haven, the bill’s main author, during a public hearing in Hartford on Wednesday.
The push for a state child tax credit began in 2021, after the federal child tax credit of $3,000 per child instituted during the pandemic lapsed.
According to data from the Center on Budget and Policy Priorities, a nonpartisan research and policy institute, child poverty across the country dropped 5.2 percent in 2021, in large part due to the child tax credit. But in 2022, the rate climbed 12.4 percent, an increase of 5.2 million children living in poverty nationwide.
“We need to move in that direction [of a child tax credit] in the absence of the federal government’s willingness to do so,” Looney said.
In 2022, the state Legislature passed a law permitting families to seek a $250 rebate for each child, up to a maximum of three children. State Rep. Kate Farrar, D-West Hartford, said during a news conference on Wednesday that over 80 percent of eligible families in the state applied for the offer.
Jessica Chubbuck, a single mom who works for a nonprofit in Meriden, said Wednesday that a $600 tax credit would allow her to enroll her son in summer camp.
“I’m trying to provide for a child’s needs in a household while barely earning a living wage,” she said. “There have been many days where I’ve struggled to find groceries or put gas in my car. Recently, I put off paying my cellphone bill so that I could sign my son up for basketball.”
New Britain mom Jessica Vargas said her income placed her just above the threshold for receiving significant public assistance. To manage household emergencies and cover doctor’s visits for her children, she said she’s resorted to using her credit card.
“Income tax time was one of my favorite times of the year because it’s when I was able to file my taxes in hopes of a good return to be able to pay down some of my credit card debt,” she said.
United Way estimated that the amount of money that a family of four needs to survive in Connecticut rose by 18 percent from 2021 to 2023, from $106,500 to $126,000 annually.
In addition to the loss of the federal child tax credit, United Way CEO Lisa Tepper Bates said the expiration of emergency funds for rental assistance and SNAP benefits, and the rising costs of food, utilities and rent have put pressure on families.
“Legislators will debate, do they put more money into food assistance or do they put more money into diaper banks? But it’s … increasingly well-understood [that] the most powerful thing you can do is to give someone money, so that they can spend the money on what they need most,” Tepper Bates said.
United Way data shows that the proposed tax credit would benefit 94 percent of families with children in New London, more than 80 percent of families in Groton and Norwich, and more than 60 percent of families in Old Saybrook, Old Lyme, Stonington, Westbrook and East Lyme.
The credit is estimated to cost about $300 million, which Looney said would need to be recouped through an increase in state income tax revenue.
Many who spoke in favor of the child tax credit also supported a capital gains surcharge — also proposed by Looney — that would place an extra 1 percent tax on the highest income earners in the state, and would place a 0.75 percent tax on the second-highest tier of earners, for any income earned through selling stocks or real estate.
But some people who testified at the public hearing said they feared the increase would drive wealthy residents out of the state.
“Affluent people are mobile. If they leave, they stop paying taxes. That cuts the money available for all government programs,” warned Carol Platt Liebau, president of Yankee Institute, a right-wing public policy institute.
Several legislators also spoke against Looney’s proposals. State Rep. Holly Cheeseman, R-East Lyme, told CT Examiner that the state should tackle rising costs through measures like indexing the tax brackets to inflation and maintaining the earned income tax credit increase that the legislature passed last year.
“If we’re going to do anything like this, we need to ensure it’s affordable. And the current proposals, particularly those that rely on volatile revenue streams like the capital gains tax, I just don’t see fitting the bill,” she said.
She added that the best path to create revenue for a tax credit wasn’t by taxing people more, but by building a better business environment so companies contribute more to the state. She noted that Connecticut’s ability to save money through various spending caps and pay down debt meant they now had an additional $800 million to spend on programs.
Republicans have proposed their own child tax deduction of up to $2,000 for families who make up to $150,000 annually filing jointly. But the deduction would not be refundable, meaning that families who did not pay over a certain amount in taxes would not receive the money.
Through increases to the earned income tax credit, Cheeseman said, the state could help a larger pool of people.
“It’s not just families with children that need help, but we also have many seniors who are struggling and young people on fixed incomes. If we are operating with limited resources, how can we spread the wealth, as it were, most widely?” she said.