Increase the Earned Income Tax Credit

Published on January 28, 2021 in

Contact your elected officials to encourage them to help working Michigan families by increasing and expanding the Earned Income Tax Credit.

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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 were struggling to afford their basic needs before the pandemic. 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 fairer since they benefit low- and moderate-income families who see a disproportionately larger portion of their income consumed by sales taxes and payroll taxes.

Federal EITC

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 the EITC. It’s clear that a boost from the EITC now would provide much-needed relief to households and communities throughout our region during the COVID-19 pandemic.

Unfortunately, not all low-income workers are eligible for the full EITC, and these workers deserve economic relief during the pandemic. This includes:

  • Individuals 19-24, often students working to pay for their higher education or graduates just starting out on their own.
  • Parents who don’t live with their children but still help to pay for their children’s expenses.
  • Veterans who fought for the country and have returned to find employment at home.

We’re asking Congress to expand EITC to support working families and individuals.

Further support can be provided by expanding the Child Tax Credit so that families are able to afford childcare and other necessities. The benefits of the EITC and CTC are clear, that’s why we are asking Congress to:

  • Increase the EITC for families with children.
  • Expand EITC for workers not raising children at home.
  • Lower the age of eligibility to 19 and expand it to include seniors up to age 67.
  • Make the child tax credit fully refundable so more children will have the support they need.
  • Create a young child tax credit to provide additional supports for children 5 and under.

By expanding the EITC and Child Tax Credit in these ways, 3.5 million Michiganders, including more than 1 million children, will see an increase in earned household income.

Contact your Congressperson today and urge them to expand the EITC and CTC!

Michigan’s EITC

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, especially during the pandemic.

We need your help to encourage state legislators to support an increase to our state’s EITC.

United Way supports an increase because:

  • It reaches more than 350,000 working families in Metro Detroit and more than 750,000 across Michigan.
  • If doubled to 12 percent, it would bring more than $200 million in tax refunds back to Michigan workers every year.
  • If restored to 20 percent, it would mean nearly $450 million in tax refunds, with an average credit of $600.
  • It has a long-term impact on children’s lives. The modest boost in a family’s income during childhood propels students to succeed in school and earn more throughout their lifetimes.
  • It’s good for the local economy. For every $1 brought into a community through the EITC, $1.67 is generated in new economic activity.

Take action with us. Tell your legislator to increase the state EITC today!