Road funding ballot proposal: a win-win for everyone

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

Supporting the passage of the May ballot proposal to increase the sales tax by a penny to fund roads is a win-win. It would benefit working families struggling to make ends meet, schools, local communities, and public transit all while fixing Michigan’s crumbling roads and bridges.

When the Legislature voted to put the sales tax increase before the voters, it tied the passage of the ballot proposal with measures to protect low-income workers and increase funding for schools, local communities, and public transportation.

According to a new report from the Michigan League for Public Policy, an analysis by the Institute on Taxation and Economic Policy shows that even after the sales tax increase, the restoration of the state’s EITC to 20% of the federal EITC is enough to offset negative effects for low-income workers. On average, when taking into consideration all Michiganders, the state’s lowest earners will experience a tax cut of $24; however, under this same plan without the increase in the EITC, these same earners would be paying $94 more a year.

Of course, the effect of the EITC will vary by income, family size, and marital status; therefore, many low-income families will experience a much more significant tax cut. For example, a married couple with two kids, who both work full-time minimum wage jobs and have an annual income of $33,252, will experience a tax cut of $177. A single parent with two kids, who also works a full-time minimum wage job and has an annual income of $16,626, will experience a tax cut of $608.

If the ballot proposal does not pass, the new Legislature and the governor will have to start all over to find a solution to fix the state’s deteriorating roads. Since revenue estimates are down and cuts are inevitable, it will be nearly impossible to find the dollars to pay for the much needed road improvements.

Supporting the passage of the ballot proposal to increase the sales tax by a penny not only provides the necessary funding for infrastructure, but it increases support for schools, local communities, and public transportation in a way that also protects working families struggling to make ends meet. That’s a win-win for everyone.

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— Alicia Guevara-Warren

2 Responses to “Road funding ballot proposal: a win-win for everyone”

  1. marc del mariani says:

    I don’t see any guarantee that after this passes the state won’t again reduce or eliminated the EITC. Maybe I am missing something. Why wouldn’t this be in the constitutional changes to assure it continues? As for the fuel tax it’s not a true user tax as we again don’t use weight as a registration fee basis that would have higher weight road users taxed accordingly. We punish the poorer driver with higher registration fees.
    I would appreciate hearing from someone on the apparent problem of no EITC guarantee.

  2. […] Our main issue with Proposal 1 is that a sales tax increase is inherently regressive, falling most heavily on the backs of the poor. As an organization dedicated to racial and economic justice, we wouldn’t have chosen that mechanism ourselves. However, for working families, the restoration of the Earned Income Tax Credit more than compensates for the tax increase. The Michigan League for Public Policy, probably the state’s most trusted advocate for working families, has done a helpful analysis of that issue which you can read at this link. […]

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