In Budget, Earned Income Tax Credit, Economic Security, News Releases, Tax and Budget, Tax Policy

For Immediate Release

Jan. 24, 2022

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

League research, county data reinforce widespread benefits of restoring Michigan EITC to 20% of federal credit

Michigan EITC continues to be major priority to reduce poverty, League applauds governor, Legislature’s efforts to address it

LANSING—With news that Gov. Gretchen Whitmer will propose restoring the Michigan Earned Income Tax Credit (EITC) to 20% of the federal credit in her 2022 State of the State, the League continues to advocate for the change with research and state and county data.

“The Michigan EITC has been a longstanding priority for the League. We supported the state EITC’s creation in 2006, we worked to save the state credit in 2011, and we have been fighting ever since to restore and expand the Michigan EITC from the drastic cut in 2011,” said Monique Stanton, President and CEO of the Michigan League for Public Policy. “The Michigan EITC is a win-win investment that resonates in all counties and political districts, benefits rural and urban residents, and supports families while getting spent at our small businesses and in our local communities. We are grateful to the governor and Senator Wayne Schmidt for making this a priority, and we hope the Legislature will do the same.”

Using the most recent tax data available, the League has compiled state and county fact sheets on the benefits of Michigan EITC–and the uptick in impact on local households and businesses of restoring it to 20% of the federal credit. The EITC pulls Michigan families above the poverty line and delivers long-lasting benefits to children in these families. In tax year 2019, about 738,380 families statewide received an average credit of $150, putting more than $110 million back into the local economy. But the EITC should do more. Fully restoring Michigan’s EITC to 20% of the federal credit—to its 2011 level—would mean an average credit of $499 for these families.

On Dec. 8, 2021, the Michigan Senate Finance Committee held a hearing on Senate Bill 417, legislation sponsored by Republican Senator Wayne Schmidt to increase the Michigan EITC to 30% of the federal credit. The League joined an array of supporters to advocate for the bill’s expansion of the state credit. Expanding the state EITC is also one of the League’s 2023 state budget priorities and is a priority in the League’s recommendations for state spending of American Rescue Plan Act dollars.

Restoring the state EITC was also included in the League’s 2020 proactive policy agenda, the Owner’s Manual for Michigan. Among other benefits of the state EITC to fill up workers’ pockets, the League’s piece highlighted the positive impact of the state EITC in promoting racial equity: “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 an income boost 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.”

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The Michigan League for Public Policy, www.mlpp.org, is a nonprofit policy institute focused on economic opportunity for all. It is the only state-level organization that addresses poverty in a comprehensive way.

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