The legislature is considering ways to balance the state budget. Despite some rhetoric to the contrary, there are plenty of mechanisms available for maintaining our investments in education, health care, and other public services. One option is to scrutinize tax expenditures to determine if any are obsolete or ineffective. Tax expenditures quietly drain the state of million of dollars in revenue every year. In fiscal year 2009 alone, we lost $375 million, which amounted to 20% of the state’s general fund budget that year.

Montana’s tax code is based on the federal tax code, so deductions passed at the federal level are automatically implemented at the state level, unless specifically disallowed by the state. The federal “domestic production deduction” tax break doesn't make sense as state policy, and is estimated to cost Montana $6 million in revenue in fiscal year 2011, at a time when we need all available revenue to maintain education, health care, and other vital public services.

In Montana, thousands of families across the state are working but still struggling to make ends meet. Recent economic trends have made it even harder for working families to live above the poverty line. Montana has over 17,000 families that are working but poor.

A state EITC would provide a much-needed economic boost to these hardworking families and their communities. Indeed, the most efficient way to stimulate the Montana economy is to support low-income families who are likely to immediately spend that support in businesses and communities across the state.