MLPP Blog: Factually Speaking

A token tax cut — A bad deal for everyone

Added July 15th, 2015 by Rachel Richards | Email This Entry Email This Entry
Rachel Richards

When you think of road funding, your first thought is… a tax cut? Likely not, but earlier this month the Senate rolled out a road funding plan that included an income tax cut. This was an attempt to sweeten a gas tax increase. But as it turns out, it’s a bad deal for everyone.

This is a bad deal for you. It wouldn’t take effect until 2018 at the earliest. It’s not guaranteed – only when General Fund revenues grow faster than inflation. It likely amounts to token rate reduction in any given year. For example, if revenues rise 1% faster than inflation, you’re looking at a rate rollback of 0.04 percentage points – a family of four making $50,000 would see a tax cut of less than $15. And wealthier individuals will benefit the most from the across-the-board tax cuts. (more…)

Save the EITC!

Added July 8th, 2015 by Gilda Z. Jacobs | Email This Entry Email This Entry
Gilda Z. Jacobs

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One of the state’s most effective tools for reducing poverty and building economic security is in jeopardy. House Republicans, led by Speaker Cotter, want to eliminate the Michigan Earned Income Tax Credit, effectively raising taxes on 780,500 low-income working families raising 1 million children. (more…)

Graduated Income Tax: Making our system fairer while raising needed funds

Added May 21st, 2015 by Alicia Guevara Warren | Email This Entry Email This Entry
Alicia Guevara Warren

As the issue of “tax fairness” continues to arise and the state faces a significant budget shortfall, perhaps it’s time to seriously consider changing Michigan’s income tax structure. Michigan is one of only eight states with a flat income tax rate, and, because of this structure, low-income taxpayers pay the 9th highest personal income taxes for their group in the country, while the top 1% actually pay at a slightly lower rate than their counterparts in other states. A graduated income tax structure, where those who earn more would pay more, makes the income tax system fairer and generates new funds. (more…)

Undocumented immigrants: Reform increases their tax contributions

Added April 20th, 2015 by Alicia Guevara Warren | Email This Entry Email This Entry
Alicia Guevara Warren

Editor’s note: The original blog post and ITEP report incorrectly stated the effective tax rate for the top 1% of earners in Michigan. We apologize for this error, which has been corrected.

Undocumented immigrants already contribute a significant amount to our state’s tax system. Under President Obama’s 2012 and 2014 executive actions, the amount will increase and could be even more with comprehensive reform.

According to a new 50-state study, “Undocumented Immigrants’ State and Local Tax Contributions” by the Institute on Taxation and Economic Policy, the 100,000 undocumented immigrants living in Michigan contribute $86 million in state and local taxes. With the president’s executive actions, ITEP estimates that this will increase by $10.86 million when it is fully implemented to allow temporary reprieve to youth who have resided in the country for at least five years and parents of U.S. citizens or legal residents. If comprehensive reform were undertaken granting lawful permanent residence to all undocumented immigrants in Michigan, the gain would be about $26.4 million. (more…)

Child poverty in the 21st century

Added February 27th, 2015 by Jane Zehnder-Merrell | Email This Entry Email This Entry
Jane Zehnder-Merrell

The number of Michigan children living in families with income below the poverty level drops by half when tax and non-cash benefits are included as income, according to the latest analysis from the national KIDS COUNT project at the Annie E. Casey Foundation.

The percentage of the state’s children who would be living in poverty if no government program benefits and tax credits were available, however, stood at 30 percent, as calculated by the Supplemental Poverty Measure. (more…)

Why kids count

Added February 19th, 2015 by Jane Zehnder-Merrell | Email This Entry Email This Entry
Jane Zehnder-Merrell

Recent news reports celebrate the decline in the unemployment rate and the quickened tempo of the recovery. But four years into the recovery, Michigan’s child poverty rates remain consistently high.

In 2013, one of every four children in Michigan lived in a family with income below the federal poverty level (roughly $18,800 for a single-parent family of three and $23,600 for a two-parent family of four), according to the latest Kids Count in Michigan Data Book, released today. (more…)

An income tax cut won’t boost the economy

Added February 9th, 2015 by Alicia Guevara Warren | Email This Entry Email This Entry
Alicia Guevara Warren

Cutting taxes won’t create jobs or grow the economy. Michigan is already facing budget cuts because there is not enough money to fund schools, public safety and other important services that we value. Reducing the income tax would create an even bigger hole in the budget, leading to more cuts and making it harder to create a strong workforce ready for the 21st century, according to a new fact sheet from the League. (more…)

Happy 40th Birthday, EITC!

Added January 30th, 2015 by Alicia Guevara Warren | Email This Entry Email This Entry
Alicia Guevara Warren

Today is EITC Awareness Day, and this year marks the 40th anniversary of the widely recognized tool that lifts millions of working families and children out of poverty each year. States have the opportunity to build on the federal credit, which Michigan does. However, in 2011 the state’s Earned Income Tax Credit was cut leaving behind over 15,000 families in poverty in 2012. On May 5, the voters will have the opportunity to restore the credit by supporting an increase in the sales tax by one penny.

The Michigan EITC is only available to families who have earned income from working. The credit ensures that working families are better able to make ends meet. When combined with the federal EITC, working families are lifted out of poverty and children experience better outcomes, such as improved infant and maternal health; better school performance; greater college enrollment; increased work and earnings in the next generation; and Social Security retirement benefits. All of which also benefit Michigan’s economy. (more…)

Lopsided income growth hurts Michigan

Added January 26th, 2015 by Judy Putnam | Email This Entry Email This Entry
Judy Putnam

The top 1% in Michigan earned 25 times the income of the bottom 99%, a new report from Economic Policy Institute concludes.

The report ranks Michigan as the 15th most unequal state in the country and offers new evidence on why Michigan policymakers should refuse more tax cuts so that they can invest in building the skills of a 21st century workforce.

In Michigan, inequality looks like this:

•    $942,993 a year on average for the top 1% of taxpayers.
•    $37,324 average annual income for the rest. (more…)

Diving deeper into the river of opportunity

Added January 21st, 2015 by Judy Putnam | Email This Entry Email This Entry
Judy Putnam

At the League, economic opportunity is our mission so it was heartening to hear Gov. Rick Snyder talk about the ‘river of opportunity’ in his fifth State of the State address Tuesday. There is an assumption in that analogy, however, that deserves a closer look.

The governor spoke about his background growing up in a 900-square-foot home in Battle Creek in a supportive family. He said despite his family’s modest income, he was still able to be part of the river of opportunity. He spoke of the Michiganians who are not part – separated by poverty, absent parents or other barriers — and he talked about his desire to move them into that river of opportunity. (more…)

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