EITC boost nearing finish line
Last week, I sat beside Bethany Broom-Dombrowski as she shared her life experiences with the Michigan Senate Committee on Housing and Human Services.
Bethany testified about her personal experience as a recipient of the Earned Income Tax Credit (EITC) — a credit for people who work hard but have low incomes — and about her work with families with low incomes in rural Ionia and Montcalm counties.
Her story was heartfelt. As a young mom, she worked as a preschool teacher, helping Michigan kids grow and learn while her own daughter did the same. And, like so many in Michigan who work in the early childhood sector, she lived paycheck to paycheck — between the cost of child care, health insurance, and other necessities, things were tight.
Fortunately, in 2011, she qualified for the federal and state Earned Income Tax Credits, and her refund included around $875 from the combined credits.The EITC helped her pay for five weeks of day care.
One year later, the Michigan Legislature made a major cut to the state EITC, slashing the credit from 20% of the federal credit to just 6%.
That’s why Bethany was in front of that state Senate committee last week, courageously telling her story. She understands the power of the EITC and that boosting it will have a ripple effect on families and communities in every county in the state.
The Michigan League for Public Policy and our partners have advocated for a state EITC for decades. We supported its introduction in 2006, opposed its reduction in 2011, and have fought since then to increase it.
The credit is a proven anti-poverty tool and has bipartisan support.
In Alpena, Alcona, Montmorency, and Presque Isle counties alone, a total of over 4,800 families received an average Earned Income Tax Credit of around $127 in 2019, returning over $608,000 to the local economies. If the credit were boosted to 30% of the federal credit, those Alpena-area families would see an average credit of around $630 and local economies would see over $3 million.
Bethany’s work and the hard work of hundreds of individuals and organizations over the last decade is finally resulting in action. It looks like 2023 could be the year that leaders in Lansing work collectively to put people first, starting with a boost to the EITC.
On Jan. 25, Gov. Gretchen Whitmer highlighted boosting the EITC — which her administration named the Working Families Tax Credit — in her State of the State address. On Thursday, the House and Senate passed separate bills that would boost the EITC to 30% of the federal credit, and do so retroactively.
We applaud the Legislature for taking swift action to pass those bills, which are a huge win for hardworking Michiganders.
Boosting Michigan’s EITC to 30% of the federal credit means a state credit of $750 on average for families statewide struggling to make ends meet because of low wages.
That could pay for a month of health care for a family, nine months of diapers, 10 months of internet. And making the credit retroactive means families can get those funds now, as prices on household goods continue to rise, rather than waiting a full tax year. Plus, Michiganders spend their credits at local businesses, keeping money flowing through our towns and cities and strengthening the economy.
We’re thankful for state Rep. Nate Shannon, state Sen. Kristen McDonald Rivet, and legislative leadership for championing that important issue.
The Legislature is finally making moves to rectify the devastating cut that was made to the credit in 2011, which made Michigan’s EITC one of the lowest in the country. That is what policymaking should look like. We look forward to getting the EITC boost over the finish line soon, and hope the governor and Legislature will continue to put Michigan’s people at the center of their work.
And we hope people like Bethany continue to share their stories. They have the power and experience to make real change possible.
Monique Stanton is president and CEO of the Michigan League for Public Policy.