In Earned Income Tax Credit, News Releases

For Immediate Release
June 10, 2022

Contact: 
Alex Rossman
arossman@mlpp.org
517-775-9053

County child poverty data, specific benefits of EITC on kids underscore need for expanding state credit

EITC is proven anti-poverty, two-generation policy, expansion has broad political and stakeholder support

LANSING—As state budget negotiations and tax reform discussions continue in the Capitol, the Michigan League for Public Policy, Michigan’s Children, the Council of Michigan Foundations, Think Babies Michigan and other children’s advocates are urging policymakers to pass Senate Bill 417 and increase the state Earned Income Tax Credit (EITC) to 30% of the federal credit as a way to reduce child poverty and improve outcomes for kids in every county.

The latest county census data fact sheets produced by the League show many kids and their families are still struggling around the state. The child poverty rate is still nearly 19% statewide, and higher than the state rate in 45 of the state’s 83 counties. Fact sheets and the poverty rate are also available for the state, legislative and congressional districts and select cities.

“This state and local data illustrate the continued challenges facing Michigan kids and their parents–and increasing the state EITC remains one of the best ways for policymakers to help improve that in their district and across Michigan,” said Monique Stanton, President and CEO of the Michigan League for Public Policy. “Nearly every area of a child’s life improves when their parents are on better financial footing, and expanding the EITC can have a direct and immediate benefit on hundreds of thousands of households and nearly one million kids in Michigan.”

Higher EITC income for single mothers with low educational attainment has been shown to increase birthweight, thanks in large part to greater access to prenatal care. State EITCs that are at least 10% of the federal credit–Michigan’s credit was once at 20% and currently sits at 6%–and full refundability contributes to both higher birthweight and fewer premature births.

Greater access to the EITC is associated with lower rates of infant mortality and EITC receipt during childhood improves the likelihood of reporting “good” or “excellent” health and lowers the likelihood of obesity in early adulthood.

“Raising the EITC to 30% will put more money in the pockets of families struggling to pay for basic necessities, including help with high child care costs that are keeping too many parents out of the labor force. As an economic policy, it’s a proven poverty buster, moving thousands of Michigan kids out of poverty. Politically speaking, it has the benefit of having support from both Republicans and Democrats,” said Matt Gillard, President & CEO of Michigan’s Children. “How much more proof do we need to do what’s right for Michigan families raising kids? Let’s get on with it, and take action. Let’s raise the EITC to 30%.”

Increasing the state EITC would also have a positive impact on racial equity and help improve outcomes for Black and brown kids in Michigan. Due to systemic structural barriers, workers of color are often more likely to earn poverty-level wages than White workers. State-level EITCs help offset the disparate racial impact of regressive taxes like the sales tax by boosting the after-tax incomes of low-wage households.

Providing an income boost to parents also has significant, long-term positive effects on children. Children in households receiving the EITC tend to do better and go further in school, and earn more as adults. As kids of color have poverty rates two to three times higher than rates for White children, the state EITC is especially important.

“The EITC is a proven highly effective financial resource putting money in the budgets of Michigan families who earn lower wages,” Kyle Caldwell, President and CEO of Council of Michigan Foundations said. “Michigan philanthropy understands that poverty has adverse effects on children’s health, well-being and learning, and for children of color, the inequities they face are even greater—the data is clear. Expanding the EITC is important for Michigan families to build more equitable pathways to opportunities, thereby strengthening our communities and our economy.”

Extra family income from EITC payments increase test scores for children, with the greatest effects on boys, children under 12, Black and Hispanic children, and children whose parents are unmarried. Higher test scores in school for children in families receiving the EITC have been found to contribute to a greater probability of attending college and higher lifetime earnings. EITC exposure in childhood increases the likelihood of enrolling in college and obtaining a bachelor’s degree. Larger EITCs during childhood lead to both a higher rank in the income distribution and a higher probability of being in the workforce in young adulthood.

Expanding the Michigan EITC from 6% of the federal level to 30% of the federal amount has support from both sides of the aisle and more than 80 influential state business, religious, health and social services organizations from around the state. SB 417 is sponsored by Republican Senator Wayne Schmidt, and was discussed by the Michigan Senate Finance Committee in May 2022 and December 2021. In both her 2022 State of the State address and 2023 budget proposal, Gov. Gretchen Whitmer called for increasing the state EITC. In particular, she noted the benefits for nearly half of Michigan kids.

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The Michigan League for Public Policy, www.mlpp.org, is a nonprofit policy institute focused on opportunity for all. Its mission is to advance economic security, racial equity, health and well-being for all people in Michigan through policy change. It is the only state-level organization that addresses poverty in a comprehensive way.