Top ten ways the Earned Income Tax Credit keeps more money in Michiganians’ pockets

Today is Earned Income Tax Credit (EITC) Awareness Day, which helps ensure that low- and moderate-income people who are eligible for the EITC actually receive it. As we work to expand our outreach on this important credit, we also need to celebrate all that this credit does for residents, businesses and communities in Michigan and nationwide.

  1. The EITC is a proven effective anti-poverty tool that rewards work and helps workers take steps toward self-sufficiency. It helps workers in every area of the state, rural and urban, and in a wide variety of industries.
  2. Research shows that the EITC has a long-lasting, positive effect on children, immediately improving their well-being but also helping them do better and go farther in school and to have higher earnings in adulthood. It is a true two-generation approach.
  3. The EITC only goes to families and individuals who work and pay taxes. To qualify, a worker must have earned income from a job and meet certain income requirements. For tax year 2015, the most a married couple with three or more kids can make to still be eligible is $53,267.
  4. The maximum credit depends on income and the number of qualifying children. For tax year 2015, a married couple with two children may be eligible for up to $5,548.
  5. The EITC is refundable—meaning that if the eligible credit amount is greater than a worker’s tax liability, he or she will get the balanced refunded. In that way, the EITC is always beneficial regardless of a worker’s tax situation.
  6. In tax year 2014, about 807,000 Michigan taxpayers raising over 1 million children received the federal EITC.
  7. The federal EITC averaged $2,448 in 2014, which was higher than the national average of $2,400. In fact, Michigan had the 14th highest credit average in the nation.
  8. The federal EITC helped pull 6.2 million Americans above the poverty line, including 3.2 million children, based on the most recent data. The Michigan Department of Treasury estimates that the federal EITC pulled 88,080 Michigan workers above the poverty line in 2013.
  9. The federal EITC returned about $2.0 billion back to Michigan’s economy. Workers use their credits to pay for things that help them keep working, such as child care and transportation, as well as groceries, utility bills and paying down debt
  10. EITC creditMichigan supplements the federal EITC with a state tax credit equal to 6% of the federal credit. In 2013, according to the Department of Treasury, about 780,500 taxpayers raising over 1 million children claimed a tax credit averaging $140. The Michigan credit alone helped pull over 6,700 Michigan residents above the poverty line.

The Earned Income Tax Credit and its impact on workers, communities and the state is amazing. However, more needs to be done. Based on 2012 data, only about 82% of eligible workers actually claimed the EITC. While this is better than the national average at 80%, nearly 1 in 5 eligible Michigan workers leaves much-needed money on the table at tax time.

To see if you’re eligible, and to get some free tax preparation help, go to: http://michiganfreetaxhelp.org/.

— Rachel Richards

An income tax cut won’t boost the economy

Cutting taxes won’t create jobs or grow the economy. Michigan is already facing budget cuts because there is not enough money to fund schools, public safety and other important services that we value. Reducing the income tax would create an even bigger hole in the budget, leading to more cuts and making it harder to create a strong workforce ready for the 21st century, according to a new fact sheet from the League. (more…)

If there’s a will, there’s a way

A new video and visually engaging report out today strongly makes the case for rebuilding the state’s education system, protecting Michigan’s abundant natural resources and investing in roads and our communities.

The project is called The Michigan Dream at Risk, from the Michigan Economic Center, an affiliate of Prima Civitas, a nonprofit organization that works to create resilient, adaptable communities in Michigan.

Gilda Z. Jacobs, the League’s president and CEO, and board members Charley Ballard and Bob Kleine were interviewed for the project. (more…)

Rebuilding the Homestead Property Tax Credit

Gov. Rick Snyder wants to use some of the state’s budget “surplus” (higher-than-anticipated revenues) to restore a portion of the Homestead Property Tax Credit that was cut in 2011.

The governor reduced the HPTC starting in Tax Year 2012, eliminating the credit for 362,000 Michigan families. He now wants to restore the credit to about 100,000 of those families. (more…)

EITC expansion would keep workers out of poverty

President Obama’s 2015 budget rightly seeks to expand the Earned Income Tax Credit to more workers — particularly childless workers. The current EITC rules are unfair to low-wage workers who aren’t raising children, including noncustodial parents. Those workers receive such a small EITC that they can be literally taxed into poverty, or driven deeper into poverty.

By far, the largest share of the EITC goes to those in poverty who work and have children. The EITC is a refundable credit for low-income working families and has been successful at encouraging certain people to take jobs, particularly single mothers. The EITC promotes work and reduces the need for public assistance. (more…)

What’s your agenda for Michigan?

 

Consider this: This November, voters will elect a governor, all 38 state senators and all 110 state representatives.

Clearly, it’s an important year for our state’s future. The Center for Michigan, described by founder Phil Power as a nonpartisan “think and do tank,” wants your input. What issues do you want elected officials to address on the campaign trail – and in the state Capitol once they are elected?

The League is hosting a Community Conversation, one of many held around the state, from 1 to 2:30 p.m. Monday at the Greater Lansing Housing Coalition, 600 W. Maple St. Lansing. (more…)

Making Michigan a true comeback state

You may be hearing a lot about “surplus” revenue as the state budget season kicks off – and more importantly, how to spend it.

Last week, the House Fiscal Agency, Senate Fiscal Agency and Michigan Department of Treasury, put their heads together to give a new prediction. The upshot — nearly $1 billion more than expected. It would have been higher, but Treasury gave a very conservative estimate of $700,000 in unexpected revenue for the three years — the 2013 fiscal year that ended Sept. 30, the 2014 fiscal year that started Oct. 1 and Fiscal Year 2015. (more…)

Ten steps to boost Michigan’s economy

new report by the League outlines 10 steps Michigan must take to improve its economy, refuting the myth that tax cuts are a shortcut to economic prosperity. Included in the report are strategies for investing in the services and infrastructure needed to create jobs and fuel economic growth, as well as tax changes that modernize and strengthen the state’s revenue system.

It is an agenda for long-term economic prosperity that includes investments in education from early childhood through higher education, access to the health and mental health services needed for a healthy workforce, basic income security for those who cannot work or find jobs, and support for the community services businesses and consumers rely on. (more…)

Time to move the sales tax into the 21st century

A recent study by the Center on Budget and Policy Priorities concludes that most state sales taxes, including Michigan’s, are ill-suited to a 21st century economy because states have not kept pace with such trends as the growth of the service sector and e-commerce.

The report recommends four steps that Michigan could take to modernize its sales and use taxes to ensure that there is adequate and stable funding for services that are vital to economic growth such as effective public schools, affordable higher education, adequate public safety, and supports for families struggling in low-wage jobs. They are a broadening of the sales tax to include more services, laws to increase the collection of taxes on out-of-state and Internet commerce, the extension of the sales tax to online products such as books, music and movies, and  closing tax loopholes for online travel companies. (more…)

Is Michigan a place for economic opportunity?

An eye-opening map in the New York Times this week shows Michigan looking like a few Southern states when it comes to “income mobility’’ — a startling realization for the state that’s often credited with birthing the middle class.

If you are born in the Detroit or Kalamazoo area and your family income falls in the bottom fifth of income, your chances are very slim of moving to the top fifth, a new study concludes.

On the “heat map,” where red shows little mobility and blue shows the most mobility, Michigan and parts of Ohio and Indiana resemble Arkansas and Alabama. (more…)

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