GOP-led Senate panel considers expanding EITC after Snyder’s cuts

By: Julia Forrest and Susan J. Demas - December 9, 2021 10:12 am

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The GOP-led Michigan Senate Finance Committee heard testimony Wednesday from numerous individuals backing a bill that would increase the Michigan Earned Income Tax Credit (EITC) from 6% to 10% by 2024.

The EITC aims to help low-wage earners get out of poverty and impacts families across Michigan.

Senate Bill 417, introduced by state Sen. Wayne Schmidt (R-Traverse City), would enable taxpayers to take a credit out of their individual income tax at a rate equivalent to the federal EITC in the same year.

The tax credit was originally chopped under former Republican Gov. Rick Snyder. He proposed cutting the tax from 20% to 6% to help pay for his $2 billion corporate tax cut, which the GOP-led Legislature passed in 2011.

The bill gradually increases the EITC to:

7% in the 2021 tax year
8% in the 2022 tax year
9% in the 2023 tax year
10% in the 2024 tax year

Democrats have proposed legislation for years increasing the EITC, but it’s so far failed to gain traction in the GOP-controlled Legislature. Democratic Gov. Gretchen Whitmer’s first budget proposal in Fiscal Year 2020, for instance, proposed a gradual boost in the EITC from 6% to 10%.

Schmidt said in the hearing Wednesday that the EITC is a “pro-work tax credit” because it encourages people to work while lifting them out of poverty.

“The EITC is a hand up, not a hand out,” Schmidt said. “It provides support to low-income earners and when the EITC has helped serve its purpose and help lift the family out of poverty and income has increased, they no longer qualify for it.”

Per the Internal Revenue Service (IRS), individuals qualify for the EITC based on income levels in which they must make less than:

$50,954 ($56,844 for married filing jointly) with three or more qualifying children
$47,440 ($53,330 for married filing jointly) with two qualifying children
$41,756 ($47,646 for married filing jointly) with one qualifying child
$15,820 ($21,710 for married filing jointly) without a qualifying child

According to research from the nonpartisan Michigan League for Public Policy (MLPP) in 2019, over 757,000 Michigan families who were raising more than 1 million children, received a state EITC average at $145 in 2015.

Monique Stanton, MLPP President and CEO, noted that increasing the Michigan EITC will mean about $443 million for families, specifically helping families with children, people of color and those in rural areas.

“We have continued to advocate for restoration of the credit — or improvements beyond — ever since, and we are excited to see the issue getting traction today,” Stanton said.

“By putting money in the pockets of families with the highest need, Michiganders receiving the EITC tend to spend their refunds on immediate expenses, like groceries, child care, utilities, rent, car repairs and more, putting the money back into our local communities. And the credit has significant immediate and long-term benefits for families with children.”

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Julia Forrest

Julia Forrest is a contributor to the Michigan Advance. She has been covering Michigan and national politics for two years at the Michigan Daily and OpenSecrets. She studies public policy at the University of Michigan.

Susan J. Demas

Susan J. Demas is a 22-year journalism veteran and one of the state’s foremost experts on Michigan politics, appearing on MSNBC, CNN, NPR and WKAR-TV’s “Off the Record.” In addition to serving as Editor-in-Chief, she is the Advance’s chief columnist, writing on women, LGBTQ+ people, the state budget, the economy and more. She previously served as Vice President of Farough & Associates, Michigan’s premier political communications firm. For almost five years, Susan was the Editor and Publisher of Inside Michigan Politics, the most-cited political newsletter in the state. Susan’s award-winning political analysis has run in more than 90 national, international and regional media outlets, including the Guardian U.K., NBC News, the New York Times, the Detroit News and MLive. She is the only Michigan journalist to be named to the Washington Post’s list of “Best Political Reporters,” the Huffington Post’s list of “Best Political Tweeters” and the Washington Post’s list of “Best Political Bloggers.” Susan was the recipient of a prestigious Knight Foundation fellowship in nonprofits and politics. She served as Deputy Editor for MIRS News and helped launch the Michigan Truth Squad, the Center for Michigan’s fact-checking project. She started her journalism career reporting on the Iowa caucuses for The (Cedar Rapids) Gazette. Susan has hiked over 5,000 solo miles across four continents and climbed more than 80 mountains. She also enjoys dragging her husband and two kids along, even if no one else wants to sleep in a tent anymore.