The Governor’s FY17 Budget Article 13 increases the minimum wage to $10.10 next year and expands the state earned income tax credit from 12.5 percent to 15 percent of the federal credit (the Governor indicated an interest in further expanding the EITC pending available resources following the mid-year revenue forecast). Senator Goldin and Representative Slater have each introduced bills (S 2156 and H 7347) to further increase the EITC to 20 percent of the federal credit. Lawmakers have made real progress in these two areas over the past several years and future process to raise the labor and living standards of our workers going forward is well warranted.
As an alternative to the Governor’s proposed phased increase in the state’s minimum wage to $15 by 2019 in New York City and by mid-2021 outside of New York City, Assemblyman Brian Kolb recently proposed to increase the state’s Earned Income Tax Credit (EITC) from 30% to 45% of the Federal EITC. The bill memorandum in support of his proposed legislation states: “Expanding the EITC is a much better alternative because it would put more money in the
taxpayers’ pockets, boost the economy and create employment opportunities for the unemployed.”
While the state’s EITC is a beneficial program for working people receiving low- and moderate wages and should be enhanced, for several reasons, it is not a substitute for increasing the state’s minimum wage. In fact, it does not even come close.
- December 1, 2015
- Mark Scott
Because women in Maryland typically earn less than men, they are more likely to pay a higher percentage of their household income in state and local taxes. The state’s highest-income households – more likely to be headed by men – pay a lower percentage of their yearly earnings in state and local taxes compared to middle-class and low-income households, which are more likely to be headed by women.
Women in Maryland, on average, earn more than their counterparts in all but one other state. Yet for every dollar women in Maryland earn, men on average earn 13 cents more—a pay gap that leaves households headed by women thousands of dollars behind those headed by men. This means that the more than 1.4 million female workers in Maryland (49 percent of the workforce) tend to shoulder a larger burden than men do when it comes to supporting our schools, the construction of our roads, and other services.
This report identifies why expanding the base of the state sales tax to include consumer services—like pet grooming, haircuts, country club membership, health clubs, and lawn care—would simultaneously help to stabilize revenue generation for the state’s fiscal system, while reforming tax policy to comport with the modern economy.