The Earned Income Tax Credit (EITC) is widely recognized as one of the most effective anti-poverty, pro-working family investments we make as a community. Simply put, it is a tax credit that allows workers with low to moderate incomes to keep more of their hard-earned wages. It is a proven tool our leaders in Lansing and Washington can use to help stabilize household budgets in the wake of the COVID-19 health crisis.
United Way’s ALICE Report shows that 43 percent of Michigan families struggle to afford their basic needs. The modest increase in income generated by the EITC is a vital tool that helps working families pay for essential household budget items and sets them on the path to economic prosperity.
These tax credits help families and communities break the cycle of poverty by making our tax code more fair, since they benefit low- and moderate-income families who see a disproportionately larger portion of their income consumed by sales taxes and payroll taxes.
In 2016, 788,000 Michigan workers claimed the Federal EITC, bringing $2 billion back to the state. Because of this, there was a measurable decrease in poverty that can be directly tied to EITC.
Unfortunately, not all low-income workers are eligible for the full EITC, and those who can’t access it are being taxed into poverty. This includes:
We’re asking you to join us in supporting the Working Families Tax Relief Act.
This legislation would not only improve the EITC but would also expand the Child Tax Credit as follows:
By expanding the EITC and Child Tax Credit in these ways, 3.5 million Michiganders, including more than 1 million children, will see increased in earned household income.
In 2010, the state legislature cut Michigan’s state EITC by 70 percent. Working families saw their tax bills increase by up to $300 — funds households need to pay for essentials like food, clothing and transportation. These few hundred dollars extra go a long way for struggling families striving for financial stability.
We need your help to encourage state legislators to support an increase to our state’s EITC.
United Way supports an increase because: