Restore Michigan’s EITC to Help Working Families

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One of Michigan’s most effective tools for supporting working families and reducing poverty—the Michigan EITC—was cut by 70% as a result of major tax changes that took place in 2011. Restoring this state credit, even in part, is the best tax relief our lawmakers could provide struggling Michigan families. It would go a long way to promote economic opportunity and help hardworking, low?income families make ends meet.

Modeled after the federal EITC, it is an effective anti-poverty tool that reduces the number of children living in poverty. Combined with the Child Tax Credit, the federal EITC lifted 117,000 Michigan children out of poverty each year between 2009 and 2011. The federal credit also has been shown to have long lasting, positive effects on children, helping them do better and go farther in school. The Michigan EITC builds on the federal credit by lifting even more children and families out of poverty and further boosting family income.

Created in 2006, the Michigan EITC was originally set at 10% of the federal EITC in tax year 2008 and 20% in each subsequent tax year. However, the Legislature reduced it to just 6% for tax year 2012 and subsequent years. The reduction in the Michigan EITC effectively raised taxes on low?income working families. This hurts Michigan children—11,700 of whom will fall back in poverty. It hurts working families and hurts Michigan’s economy.