×

Make tax code work for working families

The story of Michigan’s recovery is incomplete.

While poverty is declining, one in six Michiganders still live in poverty, and many more struggle to make ends meet. State and federal policies have continued to leave many working Michigan families behind.

Take the federal tax changes in 2017. Instead of a middle-class tax cut that boosted the economy, policymakers in Washington gave huge, deficit-increasing tax cuts to businesses and the wealthiest taxpayers, and provided very little to the rest of us.

But there’s a way to change this.

Led by Congressman Dan Kildee (D-MI) in the U.S. House of Representatives, federal policymakers have introduced legislation that would help fix our tax code for working families. The legislation, called the Working Families Tax Relief Act, would help undo some of the fundamental flaws of the 2017 Republican tax cuts, and would help boost after-tax incomes of working Michiganders by strengthening the federal Earned Income Tax Credit (EITC) and Child Tax Credit (CTC).

The benefits of the legislation would be far-reaching.

Over 1.4 million Michigan households would be helped by the Working Families Tax Relief Act, and families of all races and ethnicities would benefit, according to analysis by the Center on Budget and Policy Priorities. What’s more, 90% of the tax benefits would flow to the bottom 60% of Michigan taxpayers — taxpayers making less than $69,900 a year, based on analysis by the Institute on Taxation and Economic Policy.

That is in stark contrast to the Tax Cuts and Jobs Act enacted in the end of 2017, which has 72% of the tax cuts flowing to the top 20% of earners and only 13% of the benefits going to the bottom 60%.

Research has shown again and again the long-term, positive benefits the EITC and CTC have on families who receive it, including increasing employment, taking steps toward self-sufficiency, and improving children’s health and educational outcomes. And by targeting tax relief to working families who are still living with low and moderate incomes, the EITC and CTC help boost local economies as the families who receive the credits spend them in their communities on necessities like bills, groceries, car repairs, or a new appliance.

Policymakers in Washington should put politics aside and implement the Working Families Tax Relief Act.

But, while we wait for federal movement on that important policy, Michigan should take parts of the proposal and implement it at the state level. For example, workers younger than 25 and older than 64 who are not raising dependent children in their homes do not currently qualify for the EITC. The state can and should change that to help many young workers and noncustodial parents living on low wages.

The EITC and CTC combine to help families living with low and moderate incomes makes ends meet. The Working Families Tax Relief Act is common-sense legislation that would help Michigan families and their communities, from Monroe to Marquette and everywhere in between — including Alpena, Harrisville, Atlanta and Rogers City. Let’s make our tax code work for working families.

Rachel Richards is legislative coordinator at the Michigan League for Public Policy.

Newsletter

Today's breaking news and more in your inbox

I'm interested in (please check all that apply)
Are you a paying subscriber to the newspaper? *
   

Starting at $4.62/week.

Subscribe Today