Legislative leaders joined the United Way of Connecticut and representatives from more than 60 other organizations for a press conference promoting a proposed refundable child tax credit and its effects on childhood poverty and families struggling with high prices ahead of a legislative committee public hearing.
SB 740 and HB 5986, both of which contain proposals for creating a state child tax credit, were part of a Finance, Revenue and Bonding Committee Public Hearing on February 26.
SB 740 would create a refundable tax credit of $150 per child for up to three children beginning January 1, 2025. Over the next three years, the credit would increase to $600 per child. The amount families could receive would be reduced by five percent for every $1,000 filers made over certain income thresholds for single and joint filers.
HB 5986, which has more than 70 sponsors, would create a refundable tax credit of $600 per child for up to three children for single filers earning under $100,000 and joint filers earning less than $250,000.
At a press conference held prior to the public hearing, Lisa Tepper Bates, the president and CEO of United Way of Connecticut, said the child tax credit is an “important step the state can take” to help working families.
Senate President Martin Looney, D-New Haven, who sponsored SB 740, said the child tax credit has “extraordinary empowerment potential.” He added that, combined with the state’s earned income tax credit, a child tax credit could “work miracles to raise families out of poverty.” Looney further stated that a child tax credit would help the state’s income tax “finally achieve a level of progressivity” Democrats have been working towards for over 30 years.
Speaker of the House Matt Ritter, D-Hartford, commended Gov. Ned Lamont for items in his budget proposal that allocate money towards childcare and said that policies from both the legislature and executive branch this session show that “people feel more strongly than ever that the state needs to do more to help our families.”
Ritter alluded to a temporary expansion of the federal tax credit that occurred during the COVID-19 pandemic, stating it led to the “single largest decrease in childhood poverty in the history of our country.”
Under the American Rescue Plan Act (ARPA), the federal child tax credit was expanded in 2021 by increasing the amount of the credit, making it fully refundable, increasing the age of children who could qualify, and providing advanced monthly payments of a portion of the credit to eligible taxpayers. That expansion expired at the end of 2021.
The child poverty rate fell between 30 to 50 percent following the child tax credit expansion according to different analyses. According to the Center on Budget and Policy Priorities analysis of U.S. Census Bureau data, roughly 91 percent of families who received the expanded credit and made under $35,000 spent it on food, utilities, rent or mortgage, clothing, and education costs.
Other speakers emphasized how a state child tax credit would help Connecticut families with rising costs, boost the state’s economy, and make it more competitive with neighboring states.
“Every zip code in our state has families and children who are not able to thrive.” said Rep. Kate Farrar, D-West Hartford. She added that it is the state’s responsibility to make sure all families have a chance to thrive and that the tax credit is a “proven measure” to give families that opportunity.
Farrar further stated the tax credit would not only provide “immediate economic relief,” but boost local economies. She claimed that for every dollar the state spends on the tax credit, it puts $1.38 into the local economy.
Farrar also stated that Connecticut is the only high-cost state in the nation with a personal income tax that does not adjust for childcare expenses or number of children, which she said puts the state at a competitive disadvantage to its neighbors.
Connecticut has previously offered one-time tax credits for children of income-eligible families. The legislature has also previously considered legislation that would create a permanent tax credit.
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