Eliminating tax credit will increase burden on working families

Jan. 13, 2011
Contact: Judy Putnam at (517) 487-5436

Statement from President & CEO Gilda Z. Jacobs on House Speaker Jase Bolger’s plan to repeal the Michigan Earned Income Tax Credit:

“While we recognize the desire for everybody in the state to share in the sacrifice, poor people are being asked to be the sacrificial lambs. The Michigan Earned Income Tax Credit, which helps low- and moderate-income working households, should not be the first credit considered among Michigan’s $34 billion list of tax expenditures, including tax breaks for big corporations.

Eliminating the EITC will put more of the tax burden on those who can least afford it – the families of minimum wage workers and those who do important work in our state including janitors, waitresses, home care aides and child care workers.

Also, the credit is a proven economic stimulus, and its elimination will hurt small business in local communities across the state.  A report by the Anderson Economic Group finds that for each $1 in federal earned income tax credit, $1.67 is generated in economic activity.

Prior to the nearly unanimous enactment of the state EITC in 2006, Michigan’s income tax code was among the harshest in the country for taxing people living deep in poverty.  Now we are about average among the states for the point at which we tax income. At the same time, our tax code means our wealthiest taxpayers pay less in state income taxes than higher-income taxpayers in about 40 states.

Our lawmakers need to make sure the most vulnerable among us are protected as we continue to weather difficult economic times. This action, however, would deeply harm some of the most vulnerable people in our state, including the half-million children living in poverty.”