A public policy think tank Monday recommended doubling the state’s earned income tax credit by 2019.
Campaign for Vermont made the suggestion as part of an 18-page policy statement that it believes will help Vermont become an “economic powerhouse.”
The document describes a grim post-recession Vermont economic recovery hampered by an aging population, below-average wages and a relatively high cost of living.
But Campaign for Vermont co-founder Bruce Lisman, a Burlington native and former Wall Street investment banker, says the plan could turn the economy around.
Among other things, the group recommends increasing the earned income tax credit (EITC) by 100 percent in four years and financing that through reforms in state spending on human services, education and economic development.
The EITC allows taxpayers to reduce the amount of taxes they owe based on earnings, dependents and marital status. Vermont’s credit is tied to the federal EITC. A total of 45,137 state residents claimed the federal credit in 2013.
“The EITC is among the most powerful tools available to provide direct and efficient aid to low-income people,” the report says. “It is a wage subsidy for low-income workers.”
Campaign for Vermont also argues that economic development has “suffered a long-term neglect” under the Agency of Commerce and Community Development, pointing to a list of more than a dozen state resources dedicated to certain sectors of development that could be rearranged to provide better assistance to businesses. The group says many of these entities support many of the same initiatives. The group calls for creating a common application for all state funding and grant programs, which they say will give small businesses better access to state resources.
The report says the state should improve its workforce development by monitoring and measuring the performance of current workforce development programs, connecting state programs most closely with the business community, and expanding internships and apprenticeships. The report also calls for a plan to retain college graduates in Vermont by helping research leading to a patent.
The group says Vermont’s manufacturing industry could become more productive through employee training and energy efficiency improvements. The industry employs about 10 percent of Vermont’s total workforce, according to the state.
The recommendations also call for strategic, long-term state budgeting that includes “affordability” in every spending calculation.
