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.

While there have been economic improvements nationally and in Michigan since the Great Recession, the data don’t support the claim that this is a comeback state, at least not for all Michiganians. Here are the discouraging facts:

    • Despite slight improvements in overall child poverty, nearly half of all African-American children and 1/3 of Hispanic children live in poverty.
    • The percentage of students who are reading proficiently by the end of third grade has been increasing, but there are unacceptable disparities based on race and ethnicity.
    • African-American and Hispanic students are 2 to 2 1/2 times more likely to leave school without a diploma.
    • African-American and Hispanic young adults are less likely to be enrolled in college, more likely to require remedial courses, and less likely to graduate within six years.

Among the positive budget decisions addressing these disparities are new initiatives to improve reading by third grade, increased funding for schools with high numbers of children from low-income families, and an expansion of dental care to children in three of the state’s most populous counties.

The budget falls short in key areas related to economic growth and opportunity, including woefully inadequate investments in the youngest learners ages 0 to 3, restrictions in state income assistance programs that have thrown more children into deep poverty, and limited investments in financial aid for students from low-income families.

The League has an agenda for building a stronger Michigan that lays out what is needed to create equity and opportunity for all of the state’s children and families. There are some obvious places to start including the protection and expansion of the state’s Earned Income Tax Credit—a proven anti-poverty tool, investments in child care and other supports parents need to work, the elimination of an asset test for federally-funded food assistance and the adoption of new policies that allow families to retain and build the assets they need to weather temporary economic downturns or family crises.

In the next budget and beyond, the League will be working with the governor and the Legislature to make sure that all children and families in Michigan can benefit from the state’s economic recovery and contribute to its growth. It is critical that we use the state’s resources to address the issues of equity because it is the right thing to do, and because it is the foundation for a competitive and strong economy.

– Pat Sorenson


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.

This fall, Congress has a critical opportunity to permanently extend key provisions of these pro-work tax credits that are set to expire. But if it fails to do so, 727,000 children in 415,000 Michigan families will lose some or all of their credits, and as a result, 176,000 children and 357,000 Michiganders will be pushed into—or deeper into—poverty.

According to a recent report, the EITC and CTC do not discriminate against industries or occupations; these credits help working residents in a wide range of jobs. The following Michigan workers could lose all or part of their credits if we let these provisions expire:

    • 70,800 cashiers and retail clerks;
    • 68,800 in the manufacturing industry, such as machine operators and welders;
    • 68,400 administrative assistants and other office support staff;
    • and 56,500 food service workers—such as waitresses, dishwashers and cooks.

Often seeing these numbers en masse distances one from the real people affected; however, likely everyone knows or interacts with someone who receives the EITC, the CTC, or both. It could be your regular waitress at your favorite diner who’s a single mom of two kids, or the cashier who rings you up with your Sunday groceries who’s a grandfather raising his grandson. It could also be your son’s preschool teacher or a parent’s home health aide. These are real working people in our very own communities who rely on these credits to help pay the bills, provide for their children, and pay for simple needs like groceries and transportation.

While Michigan’s urban workers are slightly more likely to claim the EITC than rural workers, poverty is not just an urban issue, and these credits are important to Michigan’s rural residents as well. According to Center for Budget and Policy Priorities estimates, in Michigan, 155,000 rural households received the EITC, the low-income part of the CTC, or both in 2013, and 86,000 would lose all or part of their credit if these key provisions expire. About 7,100 workers in the agriculture, forestry, and fishing and hunting industries, including the farm workers and loggers who are a big part of Michigan’s economy, could lose all or part of their credits.

The benefits of the EITC and CTC are undisputed. These tax credits encourage work, help lift families out of poverty, and improve the lives of children. Additionally, research shows children in families that benefit from the EITC and CTC are healthier, do better in school, are more likely to go to college, and earn more as adults.

The EITC and CTC only go to people who work, and they encourage employment and self-sufficiency. So when lawmakers return to work in Washington after Labor Day, a day when we recognize all of the hard work that Americans nationwide put into their jobs, lawmakers in Washington should do the right thing—protect our hardworking Americans and make these key provisions permanent.

– Rachel Richards


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.

If Congress does not preserve these provisions, more than 50 million Americans, including 25 million children, will lose part or all of their EITC or CTC. Right here in Michigan, 727,000 children in 415,000 Michigan families will lose some or all of their working-family tax credits and 176,000 children, and 357,000 Michiganders overall, will be pushed into—or deeper into—poverty.

Although these credits are facing uncertainty, some legislators in Washington have made clear their plans to make many expiring business tax breaks permanent. Rather than pitting our businesses and our workers against each other, the League and our allies are simply asking that these credits be treated equally and made permanent together.

If Congress is willing to make any corporate tax breaks permanent, they should in good conscience be willing to do the same to ensure that vulnerable working families are not left behind. The formula for economic success should include businesses and workers alike, and both state and federal elected officials should be working to reduce poverty and the need for government assistance, not the other way around.

The EITC and CTC are two of the nation’s most effective pro-work, anti-poverty policies—and research shows their impacts on the well-being of poor children and their families are long-lasting. By enabling one generation to work their way out of poverty, these credits help break the poverty cycle and give kids a better chance at success when they grow up.

These credits help families and also our state economy as a whole. According to the most recent data available, the EITC boosted the incomes of 846,000 Michigan households, putting about $1.9 billion into Michigan’s economy. The CTC also had a wide reach in Michigan, with 551,000 Michigan households receiving the credit.

We have to stop looking at these credits solely as line items in a budget, but rather as faces in our communities. These are the workers, parents, and veterans that live in our neighborhoods and work in our restaurants, shops, senior centers, daycares and schools.

About 62,000 Michigan veteran and military families receive the EITC or CTC, and about 602,000 Michigan mothers and 362,000 fathers in working families receive one or both of the credits.

As Congress considers making the recent EITC and CTC improvements permanent, it also has an opportunity to fix a glaring gap in the EITC that excludes workers who are not raising dependent children, including young people just starting out and noncustodial parents. This oversight in the federal income tax system virtually taxes millions of working poor adults into poverty, and making a more adequate EITC available to these workers would help correct this problem. House Ways and Means Committee Chairman Paul Ryan (R-WI) and President Barack Obama have proposed nearly identical proposals to expand the EITC for these childless workers, and Congress should seize this opportunity to act in a bipartisan way.

The state and federal EITC and CTC only go to people who work and are specifically designed to encourage employment and self-sufficiency. The EITC and CTC have a history of bipartisan support—from President Ronald Reagan to President Bill Clinton. It is now up to Washington to continue that bipartisan support by working together to save these important provisions and strengthen the EITC for childless workers.

– Gilda Z. Jacobs


Young but not invincible: Young adults rely on credits too

When I graduated law school in 2008, I got rejection letter after rejection letter. I applied for every job you could imagine – part time, full time, hourly, salaried – the jobs just weren’t there. I eventually landed in a great office, but many millennials–those born between 1981 and 1997—who were just graduating high school, college, or from graduate programs, weren’t so lucky.

The job market was the worst in decades – record high unemployment rates, collapse of the Big Three, and the bursting of the housing bubble made jobs scarce. Census comparisons released at the end of last year showed that millennials have lower median earnings and are living in poverty at a higher percentage than their parents were at the same age, despite having a higher percentage of the population with postsecondary education. Additionally, millennials are more burdened with student debt than previous generations. The economic downturn resulted in a record high percentage of young adults moving back in with their parents.

This is precisely why young people should care about the Earned Income Tax Credit and the Child Tax Credit. The EITC is a refundable tax credit intended to at least partially offset federal payroll taxes of low- to moderate-income working taxpayers. The credit amount varies depending on marital status, number of dependent children, and annual income. The Child Tax Credit, which intends to reduce the cost of child rearing, provides a $1,000 credit per eligible child and may be partially refundable. According to the latest data, more than 800,000 taxpayers in Michigan received the EITC and more than 525,000 received the refundable portion of the CTC in 2013. These tax credits encourage work, help lift families out of poverty, and improve the lives of children.

According to a recent report from the Center on Budget and Policy Priorities, 13.9 million millennials nationwide received the EITC, refundable part of the CTC, or both in 2012. The credits averaged $2,200 and $1,300, respectively. Michigan had the 10th highest number of recipients among all states and Washington DC at 393,000. Nationwide, the EITC and CTC together helped keep 1.8 million millennials, and their 1.9 million children, out of poverty.

Expansions enacted in 2009 and later extended, boosted both the EITC and CTC, allowing more individuals to qualify and providing for greater tax relief. However, these expansions are set to expire at the end of 2017. If we allow these to lapse, 6.3 million young people, including 195,000 in Michigan, will lose all or part of their EITC or CTC, pushing about two-thirds of them into or deeper into poverty.

The good news is that many proposals recommend keeping the EITC and CTC as they are currently structured and some recommend expanding the EITC. Interestingly, President Obama and Congressman Ryan have similar proposals to expand the EITC for more childless workers. This would disproportionately benefit young workers, who are waiting longer to get married or have kids than previous generations.

The Great Recession was hard on a lot of people, and while we are recovering, we haven’t fully recovered. Extending and expanding the EITC and the CTC is just good policy. Congress should move sooner on these provisions, to provide certainty and stability, instead of waiting until the last minute.

– Rachel Richards


Graduated Income Tax: Making our system fairer while raising needed funds

As the issue of “tax fairness” continues to arise and the state faces a significant budget shortfall, perhaps it’s time to seriously consider changing Michigan’s income tax structure. Michigan is one of only eight states with a flat income tax rate, and, because of this structure, low-income taxpayers pay the 9th highest personal income taxes for their group in the country, while the top 1% actually pay at a slightly lower rate than their counterparts in other states. A graduated income tax structure, where those who earn more would pay more, makes the income tax system fairer and generates new funds. (more…)

Voting yes on Proposal 1 is voting to improve our communities

We all agree that we need better roads in Michigan, but we don’t agree on how we pay for them. With the various strains on the state budget, including a shortfall due to outstanding business tax credits and an increasingly overreliance on federal funds, it’s hard to imagine a proposal that fixes our roads, invests in our schools and local communities, and protects Michigan’s lowest earners.

Vote yes on Proposal 1 to once and for all guarantee funding for safer roads

Proposal 1 meets these objectives while any “Plan B” likely would increase road funding at the detriment of our schools, communities and vulnerable families.

Next Tuesday, voters will decide whether to back Proposal 1, a comprehensive, bipartisan plan or to take a chance with the new Legislature. There is a lot of frustration surrounding Proposal 1 for several reasons. Some people say “it’s too complicated” or “the Legislature punted the issue.” Yes, it is complicated and for good reason: A long-term, structural fix to fund our roads into the future has a lot of moving pieces that must be addressed. It can’t be simple.

But no, legislators did not punt the issue. They devised this plan that must be approved by voters. Raising Michigan’s sales tax requires a ballot proposal.

While Proposal 1 may not be perfect—no policy is—this is pretty good, and quite possibly, the best solution to all of our problems. Proposal 1 contains many benefits:

    • It removes the sales tax from gas purchases while increasing the gas tax to ensure that all of our taxes paid on gas go to support the roads.
    • It changes our flat tax rate to one based on the wholesale cost of gas helping it keep up with inflation so that the tax doesn’t lose its purchasing power and making funds more stable in the long-run.
    • Eliminating the sales tax on gas, which primarily supports schools and communities, means the sales tax must be increased to prevent cuts to schools and local governments.
    • Increasing the sales tax has the potential to hit the lowest earners the most; therefore, with the passage of Proposal 1, the state’s Earned Income Tax Credit would significantly increase from 6% to 20% to help offset the sales tax increase.

The Legislature has given the public a voice in deciding how to fund improvements to our quickly deteriorating and unsafe roads. We cannot sacrifice the possible for the perfect. Every day we wait to find a road funding solution, the costs go up for taxpayers.

Support for Proposal 1 is support for better roads, better schools, and better local communities to create a state where people will want to live, work, and play.

– Alicia Guevara Warren



Promoting Early Literacy in Michigan


We all can agree that children should be provided the supports they need to become literate by the end of the third grade. Most students who fail to reach this critical milestone fall further behind and often drop out before earning a high school diploma. Low-income students are at higher risk of low literacy skills than their peers from higher-income families and well-resourced schools.

INVEST: States that have seen the most dramatic improvements in early literacy have made substantial investments in early interventions. Without additional funding, schools with large numbers of disadvantaged students are hampered in their efforts. For example, the substantial gains in reading proficiency among Florida students were aided by $165 million to support reading specialists and summer programs.

CURRENT SITUATION IN MICHIGAN: Roughly 40,000 of the state’s third-graders did not demonstrate proficiency in MEAP reading in 2013, and 10,000 of those had scores at the most elementary level (4)—NOT proficient.


EARLY INTERVENTION IS PREVENTION: Let’s begin by strengthening existing systems for maternal and infant health, child lead poisoning prevention, early intervention for children with disabilities or developmental delays and improved access to subsidized high quality child care. Expanded access to preschool for 3-year-olds and dental care for Medicaid-eligible children would also enhance readiness.

POVERTY: The clear connection between poverty and academic achievement must be addressed. Raising the state Earned Income Tax Credit and strengthening family supports will improve achievement. Parents in low-wage jobs with minimal benefits need family-friendly policies at work and in government programs.


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…)

‘Yes’ on road funding is right direction

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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…)

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…)

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