Michigan's Earned Income Tax Credit extends a helping hand to the working poor

Every day, men and women across Michigan work hard to bring home a paycheck. Despite facing different personal circumstances and sources of employment, all share a common desire: to provide for their loved ones.

As a public policy organization that advocates for the common good, the Michigan Catholic Conference (MCC) is mindful of the fact that the state budget is a reflection of how the state cares for its citizens, particularly those struggling to make ends meet. Lawmakers are currently working to finalize the 2019-20 state budget and are considering policies to help low-income families, including the state Earned Income Tax Credit (EITC). In March, Gov. Gretchen Whitmer proposed doubling this credit as part of her executive recommendations. While the governor’s proposal is not currently included in the budget, the MCC continues to advocate for this policy that assist low-income workers.

The state EITC is modeled after the federal policy passed in 1975. The refundable tax credit provides relief for low-income workers and is available to those who are currently employed, offsetting much or all of their payroll taxes. The federal Earned Income Tax Credit was signed into law by President Gerald Ford and has subsequently found support from presidents of both political parties. Michigan passed its version of a state credit in 2006, offering those who qualify 20 percent of the federal credit. The MCC later helped to preserve the credit at 6 percent when this and several other tax policies were slated for elimination during tax policy reform in 2011.

This pro-work, pro-family credit has typically enjoyed bipartisan support for several reasons:

1. It incentivizes employment — encouraging individuals to join the labor force or to increase their hours — and allows recipients to transition toward a more stable future. Pope Francis has stated that employment helps individuals flourish, calling work “the most common form of cooperation that humanity has generated” and  “a form of civil love … that enables us to live” (Pope Francis, 6/28/17). Work allows people to participate in God’s creation, to share our gifts with one another, and to express our voice in society.

2. The EITC is one of the most effective policies for assisting families and children in poverty, both in urban and rural communities (Miller and Knudson, 5/21/19). The federal version of the credit helped lift three million children — and almost 6 million people total — out of poverty in 2017. It also helped reduce the severity of poverty for more than 7 million children (CBPP, 6/21/19).

3. It benefits local communities. Recipients often use the refund to purchase goods and services in the area, boosting spending at restaurants, grocery and hardware stores, and other small businesses
(Anderson Economic Group, 8/13/09).

4. The EITC and other credits for working families have led to “improved infant and maternity health, greater college enrollment, and increased earnings in the next generation” (CBPP, viewed 7/30/19).

Almost 748,600 Michiganders claimed the state EITC during the 2017 tax year, a total of $112 million in assistance. The average credit received per claimant was $150. This funding has allowed recipients to purchase additional groceries, take on a car repair that might otherwise have been delayed, or assist with utility bills, child-care costs or debt payments.

The state Earned Income Tax Credit alone will not eliminate poverty, and it does not absolve Michiganders of the responsibility to care for one another. The Catholic Church encourages the pursuit of good public policies and personal works of charity, which are both needed in the fight against poverty. The state EITC, however, has proved to be a valuable tool for Michigan families and should be present in the final version of the 2019-2020 state budget.

The Church teaches that each person has dignity, from the moment of conception through natural death. To recognize this dignity, the MCC consistently advocates for all Michiganders to maintain access to basic needs, including food, clothing, shelter and health care. The state EITC is a critical component of protecting these basic needs; it should not only be preserved but restored.

The Word from Lansing is a regular column for Catholic news outlets and is written by Michigan Catholic Conference (MCC) President and CEO Paul A. Long. Michigan Catholic Conference is the official public policy voice of the Catholic Church in this state.

NOTE: At the time of this writing, the 2019-2020 state budget discussions were in process. For the latest updates on the budget and the state EITC, visit www.micatholic.org or sign up for updates at www.micatholic.org/can/.