New plan paves roads on the backs of working families

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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

 

Road funding ballot proposal: a win-win for everyone

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.

(more…)

Child poverty in the 21st century

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

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…)

‘Yes’ on road funding is right direction

From the League’s First Tuesday newsletter
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It’s a pivotal time for Michigan public policy. Decisions made in the next few months will determine the path Michigan takes into the future.

In three short months, voters on May 5 will decide Proposal 1, the road funding package. There’s no doubt that this is Michigan’s single best chance to raise sorely needed money to pay for road repairs and put new dollars into school classrooms all while protecting families earning the least. (more…)

Happy 40th Birthday, EITC!

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…)

Restoring the Michigan EITC Will Help Working Families

 

The Michigan Earned Income Tax Credit is one of the most effective tools for supporting working families and reducing poverty. Michigan lawmakers approved restoration of the state EITC to 20%, if voters had approved the penny sales tax increase on May 5 to pay for needed road repairs and to support schools. However, the proposal was defeated, and the state EITC is now targeted for elimination to help pay for road improvements.

The Michigan EITC was cut by 70% as a result of major tax changes that took place in 2011. The Michigan Legislature and Gov. Snyder reduced Michigan’s EITC from 20% of the federal EITC to 6%. Most EITC recipients claim the credit only temporarily when a job disruption or other significant event reduces their income. A recent study found that, of people who received the EITC over an 18-year period, 61% received the credit for only one or two years at a time. The EITC has also been shown to have a long-lasting, positive effect on children, helping them do better and go farther in school. The EITC also increases work effort and expands Michigan’s economy.

The EITC provides working families with additional options for housing, child care, and transportation so that the family can remain in the labor force and take steps toward self-sufficiency. Restoring the EITC to 20% will lift an estimated 15,000 families above poverty and lessen the impact of poverty on 800,000 families, including more than 1 million children.

 

 

Celebrating good public policy in Michigan

Restoring the Earned Income Tax Credit, part of the bipartisan compromise on road funding approved early today, will be a boost to struggling families across Michigan.

If voters agree to the package, it will put extra dollars into working households where families have the hardest time making ends meet. It’s designed to offset additional costs from an increase in the state sales tax and wholesale gas tax to pay to fix Michigan’s battered roads. (more…)

Oh Michigan!

From the First Tuesday newsletter
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‘O’ stands for October — and it also stands for Opportunity.

With just a few short weeks before the Nov. 4 election, now is your best chance as a concerned Michigan citizen to make a difference. (more…)

Holy smoke Batman! We can reduce poverty

Like Batman and Robin, raising the state Earned Income Tax Credit and minimum wage are best when working together, a new report concludes.

The two strategies are better than one, according to State Income Taxes and Minimum Wages Work Best Together, by the Center on Budget and Policy Priorities. (more…)

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