Happy EITC Awareness Day!

Tax season officially opened on Monday, January 23rd, and Michigan residents should be aware that there are a number of ways the federal and state tax code helps keep more dollars in your pockets and in your local economies. One of the best ways our tax system does this is the Earned Income Tax Credit (EITC), which is one of the most effective anti-poverty tools we have. This credit rewards working Michigan residents and helps them take steps toward self-sufficiency, and it has long-lasting, positive effects on children.

And EITC Awareness Day today helps ensure that workers with low and moderate incomes who qualify actually know about and receive it.

Resotring MI EITC would benefit 2In 2015, about 788,000 Michigan taxpayers claimed the EITC, receiving $2,488 on average. This helped put about $2 billion back into local economies, as recipients used their credits to pay for things that helped them keep working, such as child care and transportation, as well as groceries, utility bills and paying down debt.

Michigan also provides an added boost to these residents through a state EITC equal to 6% of the federal credit. In 2014, about 775,500 households raising over 1 million children benefitted from the Michigan EITC. The average income of a Michigan EITC recipient was $17,866. The state credit averaged $143 and put $111 million back into Michigan’s economy. The Michigan credit itself helped pull nearly 6,800 households above the poverty line.

As awesome as this credit is, it can do more.

The federal credit should be expanded to workers not raising children in their homes. The credit currently provides little to no help to these hardworking taxpayers, and they are the lone group of taxpayers taxed into—or deeper into—poverty by our tax system. Expanding the credit would help up to 27,000 Michigan veterans and military members and up to 98,000 rural households. It would benefit workers doing a wide range of jobs, help workers with grown children, as well as up to 160,000 young workers just starting out.

To maximize its benefit, the Michigan EITC should be restored to 20% of the federal credit, where it was before being cut to 6% in 2011. In 2011, the credit put $446 on average back into workers’ pockets and into Michigan’s economy. At this higher rate, the state EITC pulled 22,000 households above the poverty line. In 2014, if the credit had equaled 20%, households would have received an average of $477 and would have put more than $370 million back into our local economies.

Finally, currently about 1 in 5 Michigan residents who are eligible for the credit do not claim it. A married couple filing jointly with three kids can make up to $53,505 and still qualify for a credit. A single parent raising one child can earn up to $39,296 and receive a credit. Families with children receive a greater credit than those without.

To see if you’re eligible, and to get some free tax preparation help, go to: http://michiganfreetaxhelp.org/. Due to federal law changes in place this year, tax returns with the EITC or the refundable portion of the Child Tax Credit will not receive their refund until mid- to late-February. Do not pay for a rapid-refund product that will cost you more in the long run than if you wait for your tax return to be processed and refund to be paid. And please help spread the word about all the good the EITC does in Michigan and what we can do to expand it.

— Rachel Richards

We need to narrow Michigan’s income gap

It’s no secret—income inequality exists in Michigan. However, when nearly 1 in 4 kids still live in poverty in the state and when too many Michigan residents must cobble together multiple part-time jobs just to barely make ends meet, income inequality is a problem. And more must be done to lift our most vulnerable residents to help narrow the gap.

money 22x moreA new fact sheet released by the League begins to explore Michigan’s income gap, the issues it causes and what can be done to reduce the disparity. According to a recent report, Michigan is the 11th most unequal state in income in the nation, with its top 1% earning 22 times more than the rest of its workers. Over the past 30-plus years, income growth for top earners far outpaced growth of the bottom 99%. Since the end of the Great Recession in 2009, incomes for the top grew by over 26% while incomes for the rest of the state stagnated.

Income inequality is a much bigger and broader issue than simply the top compared to the rest of us. Income gaps exist regionally, between genders and along race and ethnicity lines. In Michigan, median incomes for full-time working women continue to trail those of men by nearly $13,000, and workers of color made $3 less per hour than white workers. These disparities exist regardless of educational attainment.

We need to fix income inequality. The income gap affects Michiganians’ abilities to pay for healthcare or save for retirement or a child’s college education. And while income disparities exist at the national level, Michigan can implement state policies to help narrow the gap including:

The League will continue to highlight this important issue in a series of fact sheets. Income inequality is a persistent and increasing problem in Michigan, hurting Michigan residents, communities and the economy, and state policymakers must do more to bridge the divide.

— Rachel Richards

A banner year for better policy

From the First Tuesday newsletter
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It is 2016. A new year with new hopes, and a new set of challenges.

But before we look ahead, I want to take a moment to reflect on 2015 and what you have helped us accomplish. (From here on out, when I say “we” or “our,” know that I am including you, because the League’s work is all thanks to you.) When fighting the good fight, the victories can sometimes be few and far between, so it’s important to celebrate the ones we get, big or small. (more…)

The 2015 roads plan: Helps wealthy and hampers budget

It seems like all we’ve talked about in Michigan for the last four or more years are roads. Despite the annual construction work on seemingly every road we’re taking in the summer, our roads were getting worse. Hitting a pothole had become an understandable excuse for running late to work, a date or family dinner. And we have all heard the one about the pothole so large you could probably swim in it. (more…)

The time is now to protect federal working family credits

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I hope you all had a wonderful Thanksgiving, surrounded by family and friends and all the food and fixings you could hope for. But many Michigan families are still struggling and could soon be making due with close to $1,000 less in their family budgets if Congress doesn’t translate the rhetorical goodwill of the holiday season into actual action to help those in need.

I know I’ve been talking about this issue for several months, and I hope you are all already aware of why the federal Earned Income Tax Credit (EITC) and low-income portion of the Child Tax Credit (CTC) are so important and why the expiring provisions of these credits should be made permanent. But the need is extremely urgent now. (more…)

Veterans Day: You’ve sacrificed enough

Every year on November 11th, we as a nation thank those who served for the sacrifices they made in protecting our freedom. We honor a great uncle who served during World War II, a parent who fought in Vietnam, or a cousin who just returned from a final tour in Afghanistan. While it is important that we take a day to remember our veterans, it’s equally important to make sure veterans have the resources to return to their lives and provide for their families. (more…)

Two generation policies offer support for parents and kids

On Monday, October 26th, the Michigan League for Public Policy held our annual meeting and public policy forum, “Secure Parents and Successful Kids.” We were joined by more than 250 people from around the state and a host of national and state experts and innovators in the fields of education, economic security and child well-being to discuss a two-generation approach to tackling poverty. (more…)

More needs to be done to address economic disparities for kids and families

As we approach the beginning of the state’s 2016 budget year, the League’s latest report weighs in on whether or not lawmakers have made the investments needed to give all Michigan residents a chance to succeed. It concludes that more needs to be done to ensure that children get a healthy start in life and a high-quality education, and their parents have the skills and resources required to succeed in the workplace.

The report outlines both wins and losses for Michigan children and their families in the 2016 budget, but the greatest concern raised is the ongoing failure to invest in programs that can lift children out of poverty and create the economic security needed to overcome deep and discouraging disparities based on income, race and place. (more…)

Hard work, the American dream and tax credits

On Monday, we as a nation celebrated Labor Day. While—unfortunately—many people see it only as a day off of work, a day full of sales at the mall, and the last big grill out of the summer, Labor Day was actually established to pay tribute to the contributions and achievements of American workers. On a day that celebrates the value of work, it’s also a good time to reflect on two of our nation’s best pro-work tools and the workers they help. The federal Earned Income Tax Credit (EITC) and the Child Tax Credit (CTC) keep millions of working families out of poverty and support a diverse array of professionals across the country and around Michigan. (more…)

Michigan families need federal action on EITC, CTC

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While much attention has been focused recently on protecting the Michigan Earned Income Tax Credit (EITC), there is equally urgent action needed in Washington to save critical pieces of the federal EITC and Child Tax Credit (CTC). The federal and Michigan EITCs combine to provide much-needed support to help working families rise out of poverty, and we have to fight this battle on multiple fronts in order to protect these valuable tools.

The three provisions of the federal EITC and CTC that are set to expire are: a larger EITC for families raising three or more children; a reduction in the EITC “marriage penalty” that some two-earner families face; and a lower CTC earnings exclusion that expands the credit to very low-income working families. These stipulations are critical to helping millions of Americans and hundreds of thousands of Michigan residents make ends meet and afford the very things that keep them working, such as child care and transportation. (more…)

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