After about 18,500 tax-paying immigrant families in Massachusetts missed out on some of the direct COVID-19 relief payments from Washington during the pandemic, some advocates and progressive lawmakers want to make sure they don’t continue to lose the benefit of a state tax credit for low-income families because they don’t have a Social Security number.
A coalition of groups, including the Massachusetts Budget and Policy Center and the Massachusetts Immigrant and Refugee Advocacy Center, pushed Monday for the Legislature to expand eligibility for the state’s earned income tax credit to cover taxpayers who file with an individual tax identification number, or ITIN.
Immigrants with a range of legal statuses file their taxes each year with an ITIN, but do not qualify for the state’s earned income tax credit, which is paired with the federal EITC. These families pay $185 million in state and local taxes each year, according to MIRA.
“It doesn’t have to be this way. Five other states have recently fixed this problem,” said Phineas Baxandall, an analyst with the Massachusetts Budget and Policy Center.
If Massachusetts were to make the switch, it would become the sixth state to qualify non-citizens with individuals tax identification numbers for their state EITC, after Colorado, California, Maryland, Washington and New Mexico.
The earned income tax credit is a benefit accessed by more than 375,000 eligible families in Massachusetts earning up to $57,000 each year. The state matches 30 percent of the federal tax credit, providing an average tax break of $160 for a single filer to almost $2,000 for filer with three or more qualifying children.
Baxandall said MassBudget estimates that 13,200 additional families would seek the tax break if it was extended to ITIN holders, costing the state a little more than $9 million a year.
“From the scale of our roughly $50 billion budget, not a lot of money, but a huge difference for those working families,” he said.
Kali Schumitz, from the Maryland Center on Economic Policy, said the Democrat-controlled Legislature in that state approved ITIN holders for the state EITC as part of a package that also increased the tax credit to 40 percent of the federal credit, making it the most generous state EITC in the country.
The push to pass the expansion, Schumitz said, included a lobbying effort that combined policy analysis with the stories of immigrant families. Democrats also agreed to sunset the expansion after three years, and Gov. Larry Hogan, a Republican, let it become law without his signature, she said.
“From a policy perspective we think it should be permanent. The same reasons all taxpayers should be eligible apply to the future as well, but because it passed as part of the COVID relief package, the expansion and eligibility were temporary measures,” Schumitz said.
In Massachusetts, the coalition is backing bills (S 1841 / H 2871) filed by Reps. Marjorie Decker and Andy Vargas and Sen. Sal DiDomenico that would not only extend eligibility to ITIN holders, but also expand the state credit to 50 percent of the federal credit.
Senate Minority Leader Bruce Tarr, a Gloucester Republican, has filed a amendment to the Senate budget bill that will be debated next week that would also increase the value of the state EITC to 50 percent, but it does not include all the changes the coalition is seeking.
The House and Senate bills backed by the Healthy Families EITC Coalition would also also establish a minimum credit of $2,400 that would phase out for families earning up to $75,000, essentially establishing a guaranteed minimum income.
The groups said they expect the Revenue Committee to hear the bills in the summer or fall.
“We’re talking about families and children, people who are part of the fabric of our community and are paying their dues,” said Natalicia Tracy, of the Brazilian Workers Center.
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