For Immediate Release
May 27, 2015
Contact: Stacey Range Messina
LANSING – Fixing Michigan’s roads is certain to be a large topic of discussion among legislative, business and civic leaders at this week’s annual policy conference on Mackinac Island – a destination experienced by few of the 820,000 low-income families who are slated for a 6 percent tax hike under the House GOP transportation plan.
A new fact sheet by the Michigan League for Public Policy shows that the plan to eliminate the state Earned Income Tax Credit would push 7,000 working families into poverty and leave hundreds of thousands more struggling to make ends meet.
“This plan paves Michigan’s roads on the backs of our working poor,” said League President & CEO Gilda Z. Jacobs. “It robs poor Peter to pay Paul at a time when these families still are reeling from the Great Recession. Not everyone has recovered yet, and certainly not these families who are barely scraping by. Taking away more of their earnings is just wrong.”
The House Roads and Economic Development Committee will take testimony on House Bill 4609, eliminating the EITC, at 9 a.m. Tuesday, June 2.
If approved, it would be the second tax increase in five years on this same population of working families with low-wage jobs. The first was in 2011, when lawmakers cut the state credit from 20 percent to 6 percent – a $285 million tax hike on our lowest earners, while at the same time giving businesses a $1.65 billion tax break. The cut dropped the average credit from $430 to $143.
Studies show the Michigan EITC is one of the state’s most effective tools for reducing poverty and building economic security. At the full 20 percent, the credit lifted more than 20,000 working families above the poverty line and eased hardship for many more. At the current 6 percent, it lifts about 7,000 working families above poverty.
The EITC has long?lasting, positive effects on children, helping them do better and go farther in school. The EITC also increases work effort and strengthens Michigan’s economy by allowing working families to keep more of their income to help pay for housing, child care, and transportation so that the family can remain in the labor force and take steps toward self?sufficiency. Without the tax credit, families will have less to spend at local businesses. Eliminating the credit would provide just $117 million for the $1.2 billion roads plan.
“That’s a drop in the bucket for the state but a huge amount for one million Michigan children and their families,” Jacobs said. “This isn’t a good plan for anyone – not the families, not our communities, not our businesses. We are hopeful a new deal can be crafted that protects our working families.”
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The Michigan League for Public Policy, www.mlpp.org, is a nonprofit policy institute focused on economic opportunity for all. It is the only state-level organization that addresses poverty in a comprehensive way.