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Low-income tax credit eyed for road funding

Jun 2, 2015

Credit John-Morgan / creative commons

A state House panel is eyeing the elimination of a tax credit for working poor families to help come up with more money for roads.

Representative Jeff Farrington, R-Utica, chairs the House Roads and Economic Development Committee. He says eliminating the state’s earned income tax credit would add about $120 million for road funding.

At the same time, he says, it does not do very much to help working poor families.

“In Michigan, the average payout last year was $143 from the EITC, the Michigan portion of it,” he says. “That’s $2.37 per week.”

Supporters of the tax credit say that refund may not seem like much, but it allows low-income households to do things like deal with an unpaid bill, buy school clothes, or a pay for a car repair.

“Eliminating the Michigan Earned Income Tax Credit would be a tax hike on 820,000 working families who are raising 1 million – 1 million children here in Michigan,” says Gilda Jacobs, president of the Michigan League for Public Policy. “What it will do is basically increase poverty for thousands of Michiganders, which is a legacy that no one should aspire to.”

Governor Rick Snyder cut the state EITC from 20% of the federal credit to 6% in his 2011 budget proposal. Democrats cut a deal last year to make restoring the credit to 20% part of the Proposal 1 ballot proposal that was rejected by voters last month.