If enacted, HB 422 would impact the Maryland Tax Code by altering how the state's EITC is calculated. Notably, it establishes a pathway for residents to receive a greater refund based on their earned income credit, reflecting an effort to align state policy with the adjustments made at the federal level. This has the potential to significantly increase tax refunds for many families, stimulating economic activity and supporting state residents in need of financial support.
Summary
House Bill 422, titled the Working Marylanders Tax Relief Act of 2022, proposes modifications to the Maryland earned income tax credit (EITC) structure. Specifically, the bill aims to increase the percentage of the federal earned income tax credit that residents can use to determine their Maryland EITC refund. The intention is to provide additional tax relief to low- and moderate-income working families, thereby enhancing their financial stability and easing their tax burdens.
Contention
The bill has garnered both support and criticism. Proponents argue that expanding the EITC is a critical move towards reducing poverty and incentivizing work among low-income residents. However, opponents express concerns regarding the fiscal implications of these changes on state revenues and whether such expansions may inadvertently lead to increased dependency on tax credits rather than promoting sustained economic growth. Additionally, discussions highlight the need for careful consideration of funding these tax relief measures amid broader budgetary constraints.