In preparation for the Fiscal Year (FY) 2021 budget debate, the Massachusetts Budget and Policy Center (MassBudget) is publishing a series of four major stories to watch. These include whether lawmakers will pass a targeted tax cut to help working families, how the state will fund its newly-passed K-12 education funding overhaul, how the state will generate revenue to revamp its aging transportation system, and how revenue changes and assumptions will determine how much funding the budget can include.
This series kicks off today with a brief that considers whether the Baker-Polito Administration will reboot its proposal to double a tax deduction people can claim based on how many dependents (like a child or grandparent) they have at home or whether lawmakers will adopt a measure that would give a better bang for the buck.
The Administration earlier proposed to double the state's dependent deduction, from $1,000 to $2,000, which would cost the state $87.5 million per year. This proposal will only save families up to $50 per dependent in taxes.
For about the same cost, the state could increase the Earned Income Tax Credit (EITC) by 10 percentage points - from the current 30 percent match of the federal credit to 40 percent.
"The EITC is a proven way to move people out of poverty, boost long term health, and educational outcomes," said Phineas Baxandall, Senior Policy Analyst and author of the brief. "Compared to increasing the dependent deduction, an increased EITC would better help those who need it most."
Once the Governor releases his budget, MassBudget will publish a Budget Snapshot highlighting some of the key stories in the proposal. MassBudget also will update its interactive Budget Browser, which allows users to track the funding for each line item going back to FY 2001.
The Massachusetts Budget and Policy Center (MassBudget) produces policy research, analysis, and data-driven recommendations focused on improving the lives of low- and middle-income children and adults, strengthening our state's economy, and enhancing the quality of life in Massachusetts.
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Massachusetts Budget and Policy Center, 1 State Street, Suite 1250, Boston, MA 02109