Duncan Proposes Comprehensive Plan To Assist the County's Working Poor, Local Earn Income Tax Credit Highlights Package

For Immediate Release: Tuesday, July 13, 1999

Montgomery County Executive Douglas M. Duncan today proposed a broad-based set of initiatives aimed at improving the plight of the working poor in Montgomery County. Among the highlights of the Executive's comprehensive new "Rewarding Work" proposals is a local earned income tax credit that would supplement existing federal and state earned income tax credit benefits. If enacted, the local initiative could become the first of its kind in the nation.

In addition to the proposed creation of the local earned income tax credit, County Executive Duncan's "Rewarding Work" package calls for increased funding and services to assist low wage earners with the child care, health care, housing, job training and transportation assistance that they need to get and keep a job.

"I feel strongly that no Montgomery County resident who works full-time and supports a family should be poor," said Duncan. "Yet today, despite our economic prosperity, low unemployment and success at moving people off welfare, the ranks of the working poor in this county are growing. Families that work hard and play by the rules are still unable to meet basic needs. Children in families with working parents remain poor. This is both troubling and unacceptable."

Under Duncan's proposal for the local earned income tax credit, eligible taxpayers would receive a local refund that would match the amount they receive through their Maryland Earned Income Credit.

In addition to the federal earned income tax credit (EITC), the State of Maryland provides an earned income tax credit. Recently, the State increased the refundable portion of the credit from 10 percent of the federal EITC to 12.5 percent in tax year 2000 and to 15 percent in tax year 2001. In 1997 - the last year for which data is available - more than 21,000 taxpayers in Montgomery County claimed the EITC, with approximately 12,000 of them receiving a refund check.

"The earned income tax credit (EITC) is one of the most successful social policies of the last two decades," said Duncan. "As opposed to less well-targeted approaches, the EITC benefits the vast majority of working families with children that are poor or near poor."

Providing a local earned income tax credit to Montgomery County residents will enable approximately 13,600 households to receive an average refund of $330, with a maximum of $614, once the State refundable portion is fully phased in. The County's cost for implementing the tax credit program is estimated to be approximately $4.5 million per year. "This credit will reward those County residents who work, target the greatest benefits to those with the greatest need, and offset or eliminate completely the local tax burden on working families struggling to make ends meet," said Duncan.

Other highlights of the County Executive's "Rewarding Work" package include a more than 50 percent hike in funding for programs that provide support services to low wage earners. This increase would amount to approximately $6.5 million in additional County funds annually. Among the areas targeted for these enhancements would be assistance with child care costs; health care for uninsured adults; housing cost assistance; job training and educational options; and increased access to public transportation.

In announcing his "Rewarding Work" proposal, Duncan also noted, "I am proud to announce that every regular full-time employee of the Montgomery County government earns at least a `living wage,' as that term is defined in Bill 19-99," the legislation now before the County Council. "Moreover," Duncan added, "yesterday I signed an Executive Order mandating that we pay at least a `living wage' to every new full- or part-time Merit System employee that we hire from now on. I encourage all employers in this county - regardless of whether they contract with the County government or not - to pay their employees a living wage, as well."

In his transmittal memo to the County Council on the "Rewarding Work" proposals, Duncan concluded: "I've worked hard over the past five years to see to it that economic conditions in this county can support new job growth and that local government does its part to help those who want to help themselves. The "Rewarding Work" package will help lift people out of poverty, and support the economic boom that is essential to our continued success."

Release ID: 99-250
Media Contact: David Weaver 240-777-6530