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.

The dynamic duo complement one another to boost income, widen the path out of poverty and reduce income inequality.

Michigan has increased the minimum wage modestly, starting with a 75-cent an hour bump on Monday to $8.15 an hour. It will eventually go to $9.25 by 2018.

While a positive move, the motivation behind the increase was to sidestep a popular ballot initiative to take it to $10.10 an hour, index it to inflation, and eventually raise the tipped wage to that level, meaning that waiters and other tipped workers would earn the regular minimum hourly wage from employers, not count on tips to make up the difference. Polls showed the public supported the proposal, which narrowly missed the November ballot.

Michigan could and should do more. The state EITC was slashed from 20% of the federal credit to 6% of the federal credit, starting in 2012. That means that more than 1 million children living in households qualifying for the EITC have less income and more than 15,000 families fell below the poverty line because of that decision.

Restoring the state EITC and raising the minimum wage even more than planned would lift families from poverty, reward work and get our economy moving.

And holy cow! That just makes sense.

– Judy Putnam

 

Flood waters: a taxing problem

From the League’s First Tuesday newsletter
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My family and I were unfortunate enough to experience the recent flooding in Southeast Michigan. Despite the fact that we lost appliances, some precious photos and an assortment of stuff we had accumulated over the past 37 years, we will be OK. We had insurance and were able to get a company to clean and sanitize our basement very quickly. And we will not need to go into our retirement funds to make our losses whole.

But the 100-year flood event reminded me about Hurricane Sandy almost two years ago in New York and the devastation and damage it wrought. For those of you who read my First Tuesdays religiously, you may remember I wrote about my experience in New York, helping my daughter and her husband with their newborn son, Jacob, who was a Hurricane Sandy baby.

I was struck then, as I am now, about the importance of our public infrastructures, as well as our first responders, and government services such as garbage collection and public transportation. I am also struck and concerned about the devastating losses and public health issues that might arise from this flooding catastrophe, which has been dubbed “Latrina” — losses and health issues that impact those that have no insurance, are underinsured or who don’t have the means or information to adequately clean up their living spaces so that mold or the fallout from contaminated water don’t affect them and their family in the future.

I am also reminded how important taxes are to making sure we have the resources to build a strong infrastructure, and how cutting taxes and/or not increasing revenues has greatly reduced the ability to have updated or state-of-the-art systems to handle such catastrophes. Our taxes pay for Michigan State Police divers who free people from their underwater cars, adequate roads that aren’t crumbling and a public health system that provides information and care. Our taxes pay for police officers who patrol our streets after catastrophic events. Our taxes pay the salaries of garbage collectors who are literally handling tons of contaminated household goods.

The private sector can’t address these needs, but a strong public sector can. Next time you see a police officer, a garbage collector or a woman filling potholes, say thank you. And next time a conversation comes up about taxes, think about what you would do without those folks who are working around the clock to make sure we are safe, sound and healthy.

I am thankful every day that I pay taxes.

– Gilda Z. Jacobs

A stronger Michigan economy is within reach

Yes we can grow Michigan’s economy, create good jobs and expand opportunities for all Michiganians with the right public policy decisions. A new report by Erica Williams at the Center on Budget and Policy Priorities outlines how policymakers can make that happen.

Williams explains that states need to invest adequately in education, healthcare, transportation and workforce development. And in order to do that, they need to make decisions about how to raise and spend revenues with an eye toward the future. (more…)

Camp’s costly change of heart

U.S. House Ways and Means Committee Chairman Dave Camp, R-Mich., is having a very expensive change of heart in seeking to make a corporate tax cut called ‘bonus depreciation’ permanent.

Camp’s previous plan for tax reform recommended ending bonus depreciation. A recently released report by the Center on Budget and Policy Priorities details Chairman Camp’s policy reversal.

Bonus depreciation lets businesses take tax deductions for certain new purchases such as machinery and equipment upfront. The goal is to spur investment and economic growth during recessionary cycles. (more…)

State budget must offer economic opportunity

Join us in urging state lawmakers to support the investments in children and families that are needed to reduce poverty, help low-wage workers, restore funding for public schools and universities, and ensure that communities have the revenues needed to provide the basic services that residents and employers need to thrive and help the economy grow.

Joint House/Senate conference committees are beginning to meet today to resolve differences between the House and Senate versions of the Fiscal Year 2015 budget. After conferees sign a negotiated conference report, the budgets are sent to the full House and Senate, where they can be approved or rejected, but not amended. (more…)

State budget balancing act

As Michigan lawmakers head off to Mackinac Island for the annual Detroit Regional Chamber of Commerce policy conference, they are scrambling to resolve several big ticket issues that have slowed down the budget process and could reduce the amount of money available for services critical to our state’s economic development.

First is how best to fund much-needed improvements in Michigan roads, bridges and public transit. The governor wants at least $1.3 billion a year for improvements while some think that isn’t enough. There is little controversy that something needs to be done, but much disagreement on how to pay for it. (more…)

Feel-good proposal is bad public policy

A new proposal to create so-called sales tax holidays here in Michigan may sound appealing, but it’s poor public policy.

Sen. Mark Jansen’s proposal (Senate Bill 943) exempts certain items from the sales tax for several days prior to camping season, the beginning of school and hunting season. The idea is that eliminating the sales tax during certain times of the year will help low-income taxpayers, spur spending and cost the state little in revenue, but the facts show otherwise.

And because of that, it’s not surprising that in recent years a number of states have ended their sales tax holidays. (more…)

Mich.’s working families pay $247 million more

The numbers are in and they show that the reduction in the Michigan Earned Income Tax Credit from 20% of the federal credit to 6% has resulted in a $247 million tax increase on low-income working families.

Recently released data on the Michigan EITC for tax year 2012 from the Brookings Institution and the Michigan Department of Treasury reveal the actual EITC dollars lost for hardworking Michigan families. (more…)

Tax cuts do not lead to prosperity

Two new studies out this week should help drive a stake through the heart of the argument that cutting taxes will lead to prosperity.

For far too long tax cuts have been the tool of choice for Michigan policymakers. And guess what? Tax cuts don’t work as promised. (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…)

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