Opinion | Restoring Michigan’s earned income tax credit would help families

For more than a decade now, working families and communities with low-income brackets have missed out on millions of dollars because Michigan has one of the lowest state Earned Income Tax Credits (EITC) laws in the nation. Michigan lawmakers need to take action as soon as possible so we can put more money in the pockets of working families as we continue to emerge from a once-in-a-generation pandemic that has devastated so many.

Families are struggling to pay their bills and the rising cost of basic goods – I hear it every day from my residents.

The federal EITC is available to low- to middle-income families with qualifying children based on relationship, age, residency and tax filing status requirements. Thanks to an expansion in the American Rescue Plan, the federal credit is now more beneficial than ever to qualifying applicants who do not have children.

The idea is that workers, with or without children, can use this extra money to help pay for things like childcare, transportation costs, and other necessities. On top of this, many states – including Michigan and our regional neighbors in Ohio, New York, Indiana, Illinois, and Wisconsin – offer a percentage of the federal EITC back in after-tax incomes, further helping to boost these folks out of poverty.

Unfortunately, Michigan has one of the worst EITC rates in the nation; the Legislature previously slashed the Michigan EITC from 20 percent to just 6 percent to pay for a cut in corporate taxes. Since then, working families across the state, and especially in Wayne County where roughly 23.2 percent of families benefit from the Michigan EITC, have been left struggling.

Gov. Gretchen Whitmer and colleagues on both sides of the aisle have repeatedly called for expanding the EITC, but action has not been taken. Any more weeks without action on the EITC is detrimental to working families and our local economies.

More than 183,600 families in Wayne County alone benefited from the Michigan EITC in 2019, according to statistics by the Michigan League for Public Policy. The average boost to a working family’s income was $177, and more than $32.5 million was returned to the local economy, accordingly. But if we restored Michigan’s EITC back to 20 percent of the federal credit, the average credit for these families would be nearly $500, with some seeing even more than that. It could also more than triple the amount returned to the local economy, too, at an estimated $108 million.

Legislation exists to expand the Michigan EITC, and for the first time in a decade, it received a committee hearing in the state Senate last December. Gov. Whitmer has also called for expanding and increasing this credit in her State of the State this year. If ever there was a time to right the ship on this policy, it is now.

It’s not too late to provide relief for working families. The state legislature is currently putting together a budget for the next fiscal year, and we should prioritize including money in that budget to expand the Michigan EITC. If this simple change to our tax code can help our residents, our small businesses, and ultimately, our communities, what are we waiting for? 

Let’s do the right thing for Michiganders.