A debate over whether to expand an anti-poverty tax measure to immigrants is breaking down along party lines in the Maryland General Assembly, with Republicans vehemently opposing the move. The bill cleared an initial vote in the Senate Wednesday, with just one Democrat voting with the Republicans.
At the heart of the fight is the Individual Taxpayer Identification Number, or ITIN. Immigrants, both with and without legal residency in the United States, use the numbers to file their annual tax returns because they cannot get the Social Security numbers issued to U.S. citizens.
ITIN users do not qualify for federal tax credits, including the federal Earned Income Tax Credit.
The bill that got initial approval in the Senate Wednesday would allow ITIN users to get the Maryland Earned Income Tax Credit for three years — tax years 2020, 2021 and 2022.
“These are Maryland taxpayers who pay into our system,” Senate President Bill Ferguson told reporters on Friday. “We have credits for residents and this will treat them equally for the next three years.”
To qualify for the Earned Income Tax Credit, Maryland taxpayers who are married and have at least three children must earn no more than $56,844 in a year. Individuals and taxpayers with fewer or no children have lower income caps. The new bill does not change these requirements.
Expanding the Earned Income Tax Credit is especially significant now because of the COVID-19 relief bill that the legislature passed nearly unanimously on Friday and Gov. Larry Hogan signed on Monday. That law increases the amount of the credit for the same three years that the new bill would be in effect.
The COVID-19 relief package, however, “only included some working people in Maryland — it only included some taxpayers,” said Sen. Jim Rosapepe, a Democrat who represents parts of Prince George’s and Anne Arundel counties and serves as vice chair of the Senate Budget and Taxation Committee. The new bill, on the other hand, “is to make sure that we treat all taxpaying working people in Maryland equally.”
According to the Comptroller’s Office, about 60,000 ITIN filers would qualify for the Earned Income Tax Credit under the new bill, at a total cost to the state of just over $53 million.
During Wednesday’s floor debate, Republicans voiced strong objections to giving tax credits to immigrants without legal status in the United States.
“This incentivizes people who come in the country illegally, break our laws,” said Senate Minority Whip Michael Hough, who represents a district in Frederick County. “It's a special program for people in the country illegally.”
Senate Minority Leader Bryan Simonaire said the debate reflects a “philosophical difference” between the two sides of the political aisle.
“I don't feel sorry for those who come here illegally. They reached their dream. They got to America,” Simonaire said. “They get nice roads to drive on. They get their trash picked up. They get free K through 12 education.”
“This body's idea of fairness is raising taxes on people during a pandemic so we can give that money to people who are here unlawfully in our state,” Simonaire said. “That is not fair.”
According to the Comptroller’s Office, it is impossible to know how many Maryland ITIN users are legal residents compared with how many are in the country illegally.
On the other side of the debate, Sen. Delores Kelley, a Baltimore County Democrat, urged compassion.
“The people that you're talking about withholding this little credit from are people who in many cases are cleaning the bathrooms, where we go in public spaces. They are doing the work that many Americans who say they are citizens don't want to do,” Kelley said. “They are not sitting on the sidelines doing nothing but waiting for credit.”
Democrats also reminded their colleagues that ITIN users pay taxes — that is the point of the ITIN.
Last year, 86,245 ITIN users paid more than $64 million dollars in state income taxes, according to data provided by the Comptroller’s Office. Their tax burden grows when property, sales and other taxes are included.
The bill is expected to get a final vote in the Senate Friday before moving onto the House. If it becomes law, it will take effect immediately, allowing eligible Marylanders to take advantage of the expanded tax credit when they file their 2020 tax returns.