What is the Cost-of-Living Refund?
The Cost-of-Living Refund is an enhanced and modernized version of our state Earned Income Tax Credit (EITC). Michigan’s current EITC—at just 6% of the federal credit—provides a huge help to working families struggling to make ends meet by boosting after-tax incomes, pulling Michigan families above the poverty line, and delivering long-lasting benefits to children in these families. The Cost-of-Living Refund would build on these benefits by providing larger credits to more families, modernizing the definition of work, and including people who work but who are left out of the EITC, including caregivers and young workers without kids. It would also make the credit more user-friendly, for example, by making it available on a monthly basis to recipients and making it easier for people to file for the credit.
Making Our Tax Code Fairer
Michigan’s tax code is currently upside down, with taxpayers with low incomes paying a higher proportion of their incomes in state and local taxes than wealthier taxpayers. By amending our constitution to allow a graduated income tax—and increasing income taxes on high-income earners—the Cost-of-Living Refund helps make our tax code fairer.