New plan paves roads on the backs of working families

Added June 2nd, 2015 by Gilda Z. Jacobs | Email This Entry Email This Entry
Gilda Z. Jacobs

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The Michigan Earned Income Tax Credit lets working families who earn low wages or who have fallen on hard times keep more of what they earn to afford the basics. But House Republicans are proposing to help fix Michigan’s roads by eliminating the state EITC– hiking taxes on 820,000 working families raising 1 million kids.

Eliminating the EITC to pay for roads amounts to robbing poor Peter to pay Paul. The $117 million saved by eliminating the credit is a drop in the bucket of a $1.2 billion transportation plan, but a huge amount to families, including military families, who need the credit to make ends meet.

I testified this morning at the first hearing on this bill urging members of the House Roads and Economic Development Committee to reject House Bill 4609 and to instead reverse the 70% cut made to the credit in 2011 – a $285 million tax hike on our lowest earners, while at the same time giving businesses a $1.65 billion tax break. The committee is scheduled to vote on the bill at 4 p.m. tomorrow. There still is time to contact members and urge them to vote no!

Tell them Michigan’s working families can’t afford another tax hike.

The Michigan EITC is one of the state’s most effective tools for building economic security. A new League fact sheet finds that eliminating the state EITC will raise taxes on hard-working taxpayers, who already pay a lot in taxes, and at a time when almost one in every four children lives in poverty.

Cutting the state EITC will only undermine our ability to help families move out of poverty and improve child outcomes in both the short- and long-term.

At its previous level of 20% of the federal EITC, the state credit lifted more than 20,000 working families above the poverty line and eased hardship for hundreds of thousands more; at the current 6%, it lifts about 7,000 working families above poverty.

The credit increases work effort and strengthens Michigan’s economy by enabling working families to keep more of their income, which they spend in local communities. Most EITC recipients claim the credit only temporarily when a job disruption or other significant event reduces their income. Plus, the EITC has long?lasting, positive effects on children, helping them do better and go farther in school, and work and earn more as adults.

In addition to the fact sheet, we have posted a spreadsheet showing the number of families receiving EITC in each county and how much money that brings to each county. You also can read my testimony.

On a personal level, I want to acknowledge and thank everyone in the League family for their outpouring of love and kindness as my family and I cope with the sudden death of my daughter, Rachel.

Rachel loved the work of the League, was proud of my leadership, and believed the League’s work was an extension of her own commitment to economic and social justice. I hope that we can all learn from her short 39 years to help others and make lasting personal connections. Be sure to hug the people you love and remember to tell them that you love them.

— Gilda Z. Jacobs


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