by Monique Stanton, Michigan Advance
January 17, 2023
On Thursday afternoon, Gov. Gretchen Whitmer announced her support for increasing the Michigan Earned Income Tax Credit (EITC) — or as she referred to it, the Working Families Tax Credit — as a proven, bipartisan policy to put more money back in the pockets of working families and small businesses.
When paired with the federal EITC, increasing the state EITC to 30% of the federal credit for Michigan’s working families would deliver an average combined tax refund of more than $3,200 to over 730,000 families.
An analysis by the national Center on Budget and Policy Priorities shows that the increase would lift 32,640 people — including 16,800 children — above the poverty threshold.
Whitmer is not alone in her support of the credit, as bills in support of a boost to the EITC dropped on Thursday, as well. House Bill 4002, sponsored by state Rep. Nate Shannon (D-Sterling Heights), calls for restoration of the state EITC to 20% of the federal credit for 2023 tax year and beyond, and Senate Bill 3, sponsored by Sen. Kristen McDonald Rivet (D-Bay City), calls for increasing the EITC incrementally each year up to 30% of the federal credit by 2025.
The Michigan League for Public Policy has championed a state EITC since before the credit’s creation in 2006, and we fought against the drastic cut to it in 2011.
That year, the tax cut for working families was reduced from 20% of the federal tax credit to just 6%, today one of the lowest credits among states with an EITC. This hurt Michigan workers, especially families with children, taking hundreds of dollars that they worked hard to earn, while companies reaped profits.
We applauded Whitmer for proposing a Michigan EITC increase in 2019 and again in 2022, even though those didn’t pass, and we are glad to have the governor championing the EITC again in her announcement this week. And with the support we’re seeing already, we’re highly optimistic for an EITC increase in 2023.
The EITC has always been a bipartisan policy, supported by Republicans and Democrats and benefiting residents who are struggling to make ends meet in urban, suburban, and rural communities. Lawmakers on both sides of the aisle and a coalition of more than 130 organizations have recognized the benefits a stronger state credit would bring to Michigan’s families, kids, communities and businesses, and support continues to grow this year.
Supporters of boosting the credit to 30% of the federal credit include the Small Business Association of Michigan, Michigan Manufacturers Association, chambers of commerce from Midland, Saginaw, Grand Rapids, Detroit and more, Michigan Restaurant and Lodging Association, Health Care Association of Michigan, Michigan Catholic Conference, The Christian Reformed Church of North America, United Church Outreach Ministry, Michigan’s Children, United Ways from Midland and Washtenaw counties and South Central, Southeast, Southwest and West Michigan and more.
For hundreds of thousands of Michiganders who are trying to raise kids on jobs that pay less than $15 an hour, restoring the state EITC would be a lifeline. Recipients would spend the combined $3,000 tax refund on immediate needs — utility bills, groceries, car repairs and more — spending that stimulates local economies and supports local businesses.
Cutting taxes for workers and families with children is not only the right thing to do for Michiganders who are struggling with poverty; it also grows our economy by investing in our communities.
Cutting taxes for workers and families with children is not only the right thing to do for Michiganders who are struggling with poverty; it also grows our economy by investing in our communities.
Increasing the EITC is an investment in Michigan’s future. Taking action to make children’s lives better will help ensure they grow up without wondering where their next meal is coming from, scrambling to succeed in the classroom without school supplies or facing housing insecurity. Raising the EITC will make a difference for parents and kids alike.
And increasing the EITC stands to benefit almost 1 million kids — nearly half the kids in Michigan — helping their parents buy new backpacks, warmer coats and groceries.
As policymakers and advocates alike prepare for the first phase of the state budget cycle with the governor’s recommendation anticipated in early February, the state has a $9.2 billion state budget surplus. That means Michigan is in a uniquely strong position to implement this once-in-a-generation chance to cut taxes for workers and families with children and help businesses.
We hope all House and Senate members know the power the EITC has for the people in their districts and will seize this opportunity to boost it to 30% of the federal credit.
Michigan Advance is part of States Newsroom, a network of news bureaus supported by grants and a coalition of donors as a 501c(3) public charity. Michigan Advance maintains editorial independence. Contact Editor Susan Demas for questions: info@michiganadvance.com. Follow Michigan Advance on Facebook and Twitter.
