Tax increase on working families

Added April 26th, 2013 by Judy Putnam | Email This Entry Email This Entry
Judy Putnam

 A 12-year-old Ford Taurus is Paula Fekken’s lifeline. She uses it to get to her job running the mailroom at the Interlochen Center for the Arts, eight miles from her Traverse City home. She also uses it to transport her four boys – ages 8, 11, 15 and 16 – to numerous school activities.

She wants her tax returns to go toward needed repairs on the road-weary Taurus, but an $825 tax increase from the state of Michigan may push that goal out of reach.

Paula Fekken

“Pretty much all of my money goes to clothing and shoes and basic needs,’’ said Fekken, 42, and newly divorced.

Like many lower-income workers, Fekken is feeling the sticker shock from tax changes made in 2011. That’s when the majority in the Legislature and Gov. Rick Snyder increased taxes on individuals by 23% and cut business taxes by 83%. The big tax shift is just now being felt by working families and seniors as tax returns come in.

A major piece of the tax shift came from chopping the state EITC from 20% of the federal EITC to just 6%. The EITC is a credit for lower-income workers. It is designed to reward work and offset other taxes that cause low-income people to pay a bigger share of their income in taxes such as payroll taxes, sales tax and property taxes.

The Michigan EITC dropped from an average of $439 to $132. For big families, the impact is even greater. Fekken earned just over $26,000. Her state EITC this year is $353 – down from $1,178. That’s a big loss to absorb for families struggling to make ends meet.

Fekken said she is lucky that her job pays more than minimum wage. At $10.50 an hour, it’s a lot more than many people she knows. She also receives child support from her ex-husband, though not always the full amount.

Still, she says she has to be careful with every dollar and the reduced EITC will be felt.

“Most of my money goes to food. With the four boys — every little bit helps,’’ she said.

For more information on restoring the Michigan EITC, go to www.saveoureitc.com. Follow the campaign on Facebook and on Twitter with #MIEITC.

— Judy Putnam

4 Responses to “Tax increase on working families”

  1. Robin Antoine says:

    Shame on You Governor Snyder..This is Bad for Us Working Families..And You wonder WHY People are leaving MI..

  2. […] The Michigan League for Public Policy highlighted the story of Paula Fekken, a low-income working mother of four who is feeling the sticker shock from tax changes made in Michigan in 2011, when the Legislature and Gov. Rick Snyder reduced the state EITC from 20 percent to 6 percent of the federal credit. The change means she won’t be able to repair her aging car that she needs for work. (Michigan League for Public Policy) […]

  3. […] 6% of the federal credit to 11% of the federal credit. For a working mom with four growing boys, like Paula Fekken of Traverse City, that would mean $300 more for car repairs and other necessities to keep her on the […]

  4. […] 6% of the federal credit to 11% of the federal credit. For a working mom with four growing boys, like Paula Fekken of Traverse City, that would mean $300 more for car repairs and other necessities to keep her on the […]

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