Steyer: Michigan needs to keep EITC
As state lawmakers search for ways to fund much needed road maintenance, some are advocating for a cruel cut to Michigan families that could have tragic consequences for nearly 1 million Michigan children, and make it even harder for families to break the cycle of poverty.
Unfortunately, these lawmakers have crafted a false choice between helping the working poor or providing much-needed funding to help repair Michigan’s roads and other essential infrastructure.
Obviously, the two concepts have nothing to do with each other. Insisting that the way to fix the state’s roads is to end the Michigan Earned Income Tax Credit, sending thousands of kids and their families into poverty, is as illogical as it is misguided.
The Michigan EITC provides tax relief for Michigan families struggling to get by, even amid our economic recovery. To qualify, a family of four must have an income of about $50,000. These are people who are struggling to get by, and to provide basic services for their children.
Many of those who are eligible for the Michigan EITC live in rural Michigan, where incomes are low and poverty rates are high.
The credit saves the working families of Michigan an estimated $117 million annually, and is one of the most effective tools we have to lift people out of poverty.
In Michigan, as in other states across our country, the gap between the haves and have-nots is growing. There are still too many people who are not participating in the Great Recovery.
According to the U.S. Census Bureau, the poverty rate in Michigan is higher than the national average. An estimated 17 percent of all Michigan’s 9 million-plus residents are living below the federal poverty line. The problem is worse among Michigan’s kids. Nearly 1 in 4 Michigan kids are living in poverty.
During the Proposal 1 campaign, Gov. Rick Snyder and key business groups around the state supported the state EITC as an important tool for reducing poverty among working families and children. A recent poll by EPIC-MRA shows that when asked whether we should cut the state EITC to pay for transportation improvements, voters rejected the idea by 65-13 percent. That same poll found 74 percent of people said the EITC “is an important benefit for families need poverty.”
Researchers have cited the state EITC as among the most effective government programs to put parents back to work, particularly single mothers and female heads of households. Research also shows that by boosting the employment of single mothers, the EITC reduces the number of female-headed households receiving cash welfare assistance.
This financial stability means a fairer start for thousands of Michigan kids. Numerous studies show that poverty impacts early childhood development, and children’s health, and can create educational obstacles early in a child’s life that many will never overcome.
Eliminating the credit now is the wrong move. It would raise taxes on about 820,000 hard-working households in Michigan, increasing the financial burden for those who are most vulnerable to slipping back into poverty.
Some 26 states and the District of Columbia have some version of their own Earned Income Tax Credit to supplement the benefits to working families offered by the federal EITC program. The latest, California, took the step this year to help address the growing problems of poverty and income inequality that persist in most states across the country.
Canceling Michigan’s state credit now would be a step in the wrong direction.
James P. Steyer is CEO of Common Sense Kids Action