earned income tax credit

In an apparent attempt to pander to voters, the Michigan Legislature is rushing to pass an election year income tax cut. This is a little baffling, because the voters don’t want one.

The state has a budget surplus – on paper, anyway – of a little less than a billion dollars. Two weeks ago, an EPIC-MRA poll found only 11% of the voters thought a tax cut was a good idea. The rest were divided about evenly between those who wanted it to go to schools and those who want it to go to our roads.

The Pew Charitable Trusts

State of Opportunity's Jennifer Guerra spoke with Tiffany and Rodrico Blackman in 2011 when the Earned Income Tax Credit (EITC) was under scrutiny from Michigan's legislature. Back then the Blackmans were parents of three kids making ends meet on $22,000/year.

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Policymakers debate how to spend surplus

The debate continues in Lansing over how the state should spend almost half a billion dollars in unexpected revenue this year. The Michigan League for Public Policy believes that because the state’s Earned Income Tax Credit is less than a third of what it was a couple years ago, legislators should restore the credit for the working poor.

"A spokesperson for state House Democrats says they support the idea of using some of the money to restore the Earned Income Tax Credit. However, Governor Rick Snyder says a similar tax credit from the federal government does enough to help working poor families in Michigan. He wants to use the extra cash to fix roads," Michigan Radio's Jake Neher reports.

Merger between Beaumont and Henry Ford sacked

The planned merger between Beaumont and Henry Ford health systems, two of southeast Michigan’s largest health care providers, has been scrapped. The leaders of each hospital signed a letter of intent to merge last fall, but negotiations didn’t work out so well. On Tuesday, Henry Ford CEO Nancy Schlichting sent a letter to employees, indicating they’ll end talks and let the agreement expire.

“It became apparent that two very different perspectives have emerged for the new organization between Henry Ford and Beaumont,” Schlichting wrote. Michigan Radio's Sarah Cwiek has more.

Rising car sales cut plant shutdowns

Summer vacation will be cut short for auto factory workers in Michigan this year, as carmakers try to keep up with heightened demand. Detroit automakers plan to reduce their annual shutdowns at dozens of North American plants that produce popular Ford and Chrysler models.

“This sends a strong signal that the industry is in a healthy place,” Jeff Schuster, senior vice president of forecasting at market researcher LMC Automotive, told The Detroit News.

CedarBendDrive/flickr

A group that advocates for working poor families in Michigan says the state should use a recent tax windfall to restore low income tax credits. Last week, the state announced it expects to receive close to half-a-billion dollars more than originally thought this year.

Gilda Jacobs, with the Michigan League for Public Policy, says it makes sense to give some of that money back to low-income taxpayers.

“In part, one of the reasons that there are greater revenues is because the tax burden, the tax shift, was shifted back to low- and middle-income people and seniors,” she said.

She says working poor families have been negatively affected.

“And there is an opportunity through restoration, or partial restoration of the Earned Income Tax Credit to help make whole some of that tax increase,” said Jacobs.

Governor Rick Snyder and state lawmakers have scaled back the Earned Income Tax Credit in recent years. They say the same credit at the federal level does enough to help the state’s working poor.

Democrats in the state Legislature have introduced bills to at least partially restore the credit.

Gov. Snyder says the money from the tax windfall should go toward fixing roads.

Photo courtesy of the Snyder administration

When Governor Snyder and Michigan legislature cut part of the Earned Income Tax, they argued that it was just a move that piggy-backed on the federal Earned Income Tax Credit. 

Michigan lawmakers cut the 20 percent rate of the federal credit to 6 percent of federal credit.

This meant that many poor, working-class families saw an increase in their taxes in addition to tax increases they felt from other legislative changes.

The state's advocates for the poor have called upon the legislature to restore the Earned Income Tax Credit to Michigan in order to ease the financial stress felt by poor families.

Michigan Radio's Lester Graham spoke with Gilda Jacobs, the President and CEO of the Michigan League for Public Policy. 

Listen to the audio above to hear the story.

User: Brother O'Mara / flickr

Storm dumps at least 6 inches on Michigan

A wet snow storm dropped at least 6 inches of snow on part of Michigan. As the Associated Press reports,

"The National Weather Service says as of Wednesday morning 6 inches fell in the Grand Haven and Muskegon areas, while 5 inches fell between Lansing and Jackson. Four to 5 inches fell in Grand Rapids. Four inches fell in some Detroit suburbs and Saginaw," the Associated Press reports.

Low income earners could see bigger tax refunds under bill

"Low-income Michiganders would see bigger state income tax refunds under a bill in the state Legislature. Governor Rick Snyder and lawmakers aggressively cut the state’s Earned Income Tax Credit in recent years. The legislation would raise the credit to 20 percent of what the federal government offers. Right now, it’s at six percent," Jake Neher reports.

Mike Duggan announces run for Detroit mayor

The former Detroit Medical Center executive and Wayne County prosecutor, Mike Duggan has officially announced that he will be running for Detroit mayor. According to the Associated Press, "[Duggan] says he'll use his managerial and government experience to help turn around Detroit's finances and improve poor public services."

A year ago, in their zeal to give businesses an enormous tax cut, the governor and the legislature considered virtually eliminating the Earned Income Tax Credit for the working poor. In the end, they didn’t quite kill it. Instead, they merely took most of it away.

When they did, there was hardly a whimper of protest from the Democrats. About the only group which seemed upset was the non-profit and non-partisan Michigan League for Human Services.

The Michigan League for Human Services is pressuring lawmakers in Michigan who voted last year cut tax credits for working poor families.

The earned income tax credit - or EITC - gives people who would qualify for welfare an incentive to go to work instead. There's a federal credit, and one offered at the state level too. But the state credit was reduced last year in a budget-cutting move.

The reduced tax credit allows families who qualify to claim 6-percent of the federal earned income credit on their 2012 state taxes. In the past, families could claim 20-percent.

Judy Putnam is with the Michigan League for Human Services; a non-profit, non-partisan advocacy group. She says the tax credits boost the economy because poor families spend the money right away.

 "Whereas a business or an upper-income tax payer you know getting tax breaks they don’t automatically go and spend that money,” Putnam said.

The organization has published a report it hopes will convince Republicans to restore the earned income tax credit. The report outlines the legislative districts with the most residents affected by the change. 

Here's the breakdown by state senator's district; while another set here break the data down by state representatives. 

MLHS

A new report by the Michigan League for Human Services takes a look at Michigan's shifting tax policy and it's impact on low-income families.

The report shows what we already know, that businesses in Michigan will receive a tax cut in the state while individuals will pay more.

Low income families, the report's author Joanne Bump concludes, will be hit the hardest.

Governor Rick Snyder's administration has agreed to restore a reduced version of the state income tax credit for working poor families.

The reduced tax break will allow families that qualify to claim 6% of the federal earned income credit on their state taxes.

In the past families could claim 20%.

Snyder's original proposal called for elimination of the credit.

What if the governor increased the amount of Michigan income tax I had to pay by ten dollars a week?  The truth is, I’d barely miss it, and if I went out to eat a little less often, I wouldn’t miss it at all.

I’m not anything close to rich, but fortunately, I manage to make an income adequate for my family’s needs, and don’t have any children who need to go to camp or college.

Soaking the Poor

Apr 14, 2011

President Obama came under fire yesterday for proposing that the richest Americans pay a higher proportion of the tax burden, especially with deficits soaring out of control.

Republicans, some of whom are running for president, said this would hurt the economy‘s ability to create jobs.

They said this was just one more wrong-headed left-wing proposal to solve economic problems by “soaking the rich.”

Well, that’s a battle that will be fought out on the national stage, likely throughout next year’s presidential campaign and beyond.

Bill Rice / Flickr

When the budget was introduced, it was left to Lieutenant Governor Brian Calley to explain some of the details.  Among them was the Governor’s proposal to eliminate the Earned Income Tax Credit, a move that would take away a tax break for the state’s working poor.

Cedar Bend Drive / Flickr

Republican state Senator Roger Kahn introduced a bill yesterday that would eliminate the state's Earned Income Tax Credit. The tax credit currently goes to low-income working people in Michigan. The Associated Press reports:

He (Kahn) says the credit is expected to cost the state roughly $370 million in the upcoming fiscal year and the state can't afford it. Many House Republicans also support eliminating the tax credit. The tax credit is staunchly defended by groups including the Michigan League for Human Services and the Michigan Catholic

Conference. They say eliminating the credit would be the equivalent of a tax increase on the working poor.

The state faces a projected $1.8 billion shortfall for the fiscal year that begins October 1st.

User VanZandt / Flickr

State lawmakers trying to eliminate the Earned Income Tax Credit are hearing from the Catholic Church.

The Michigan Catholic Conference says keeping the credit for the working poor is its top policy goal for this year.

The Conference is the official lobbying arm of the Michigan’s Catholic Dioceses and represents 2.25 million people.

Dave Maluchnik is a spokesperson with the Michigan Catholic Conference.

We have urged members of the House to reconsider their proposal to eliminate the earned income tax credit. There are numerous other groups out there in the state who are very concerned. In fact, there are many protestant organizations, Jewish organizations, that are very interested in protecting this policy.

Lobbying on all sorts of issues will heat up in the coming weeks when Governor Rick Snyder announces his budget priorities for the next fiscal year on February 17th.

Sarah Alvarez - Michigan Radio Newsroom

Governor Rick Snyder has not yet said whether he’ll support efforts to increase state taxes on the lowest-earning workers in Michigan.  He has indicated he’ll have something to say about whether to eliminate the Michigan Earned Income Tax Credit when he gives his budget address.

“Well, we’ll save that for mid-February.  But the Earned Income Credit is largely a federal program.  That’s the main driver that brings results, is the fact that it’s on your federal return.  It’s a question of how much difference does the Michigan piece of that make in terms of changing behavior.”

Lester Graham / Michigan Radio

Republicans at the state Capitol are working to get rid of a tax credit for working poor people.

But people who support the Earned Income Tax Credit say the money helps poor people keep their jobs.

Without the credit they might have to go back on welfare, an they say that would cost the state more money.

Gilda Jacobs, director of the Michigan League for Human Services, says all lawmakers have constituents who claim the credit:

"We have some districts where 18% to 20% of the people are filers of this, and they’re putting multi-millions of dollars back into small businesses. So we kind of need to ask people to see this up-close and personal and to really be open to understanding what this is all about."

Republican House Speaker Jase Bolger says the state cannot afford the Earned Income Tax Credit right now:

“The Earned Income Tax Credit is very new in Michigan. It didn’t exist a couple of years ago. It was added at a time where I believe we couldn’t afford it. So as we look at how we are going to revamp Michigan and how we are going to move forward, we have to evaluate things that we can maybe no longer afford, however we do have to look at that with a broader tax structure, and we have to understand that the best social program is a good-paying job.”

Bolger says eliminating the Earned Income Tax Credit will be part of a large package of reforms that are expected to be introduced soon in the House.

Supporters of the tax credit say they have a lot of work to do to convince lawmakers that getting rid of it would hurt people in their districts.