Advocates for poor criticize Senate tax vote

A compromise plan to reduce the funding cuts for K-12 schools in part by reducing the Earned Income Tax Credit for the state’s low income families has the Michigan League for Human Services, a non-profit organization that advocates on behalf of Michigan’s poor, crying foul. In a press release, the MLHS says:

The working poor in Michigan should not be asked to pay for business tax cuts. That’s both poor fiscal policy and a broken promise to those families with the lowest incomes in the state.

A low-income working single mom with two children would lose $500 in tax credits under the legislation approved by the state Senate Thursday.

Michigan has the opportunity to help ease the pain of low- and moderate-income households by moving forward with the Michigan Earned Income Tax Credit as scheduled. We ought to be looking at everything we can do during these exceptionally hard times to help these families.

It also makes smart fiscal sense. These are the very households that will spend that credit. It will pay for car repairs, rent, utilities or other necessities, providing much-needed boosts to the local economies.

The state Senate, in voting to freeze Michigan’s Earned Income Tax Credit, is breaking a promise to 700,000 working poor families.

The Michigan Earned Income Tax Credit was established in 2006. It is a refundable tax credit, meaning that even those who have no tax liability to the state because their income is too low still receive the amount of the tax credit as a direct payment.

The amount was initially set at 10 percent of the Federal EITC but it was set to double to 20 percent this year. Under the compromise bill, it will be frozen at the original 10 percent level, costing low income families about $500 next year.