The Policy Institute, based in Helena, Montana, blends authoritative research and hands-on political engagement to create public policy based on economic justice, fair taxation, corporate accountability and environmental responsibility.

2009 Legislative Priority: State Earned Income Tax Credit

During the 2009 legislature, The Policy Institute worked as a member of the Montana EITC Coalition to enact a state Earned Income Tax Credit (EITC) in Montana. A state EITC in Montana would piggy-back on the federal EITC and would help lift low-income working families in Montana out of poverty.

More than 20 states that have an income tax have already enacted state EITCs and the concept has historically enjoyed bi-partisan support. President Reagan called the federal EITC, “the best anti-poverty, the best pro-family, the best job creation measure to come out of Congress.”

For many Montana families, as income increases, eligibility for assistance programs decreases, creating a disincentive to earn more. Add to that the fact that poor families in Montana are taxed more heavily than the national average, and the need for a state EITC in Montana is clear.

In the 2009 session, Sen. Christine Kaufmann and Rep. Mary Caferro introduced bills that would have created a refundable EITC in Montana (15% and 20%, respectively). Kaufmann's bill died in the Senate Taxation Committee.

Caferro's bill, however, passed out of the House Taxation Committee, on a 14-6 vote, with four Republicans voting in favor of the bill. HB 360 then moved to the floor of the House where it passed 65-35, with the support of 15 Republicans. The bill was then referred to the House Appropriations Committee, where a motion to move the bill out of the committee failed 10-10, along party lines. Rep. Caferro then made a blast motion to move the bill to the floor for Second Reading, but that motion failed 49-49.

While the Montana EITC Coalition was disappointed by the bill's defeat, we were encouraged that, for the first time ever, a bill to enact a state EITC in Montana passed a vote in a full Montana legislative chamber. An effort to pass a state EITC in 2011 is already underway.

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