Increased working income tax credit could help tackle child poverty

Child advocacy organizations across the state are urging lawmakers to increase Michigan’s income tax credit to help tackle child poverty.

The Michigan League for Public Policy, Michigan’s Children, Council of Michigan Foundations, Think Babies Michigan and others are advocating for support for Senate Bill 417, which would increase the state’s percentage of EITCs.

The EITC is a way for low-to-middle income individuals and families to get a reduction in their taxes. For those who qualify, the EITC can reduce taxes owed and potentially increase refunds.

Senate Bill 417 was introduced by Sen. Wayne Schmidt, R-Traverse City, in May 2021. If passed, it would gradually increase Michigan’s EITC to 30% of the federal rate.

Currently, Michigan offers 6% of the federal EITC. This rate has been in place since 2012 and was previously 20%.

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Of 31 states that offer an EITC — including three states with a policy taking effect in 2023 — only four offer a lower percentage of the federal EITC than Michigan’s 6%.

The bill was discussed by Michigan’s Senate Finance Committee in December 2021 and May 2022. Governor Gretchen Whitmer called for increasing the state’s EITC in her State of the State Address. 2022 and its 2023 budget proposal.

About 19% of Michigan children live in poverty, according to the most recent data.

By increasing the state’s EITC, advocacy groups say struggling families will have more money to meet their needs and lift families out of poverty.

“Raising the EITC to 30% will put more money in the pockets of families struggling to afford basic necessities, including help with high childcare costs that keep too many parents out of the market. labor,” said Matt Gillard, President and CEO. children from Michigan.

The state average for the overall poverty rate is 14 percent. This number increases to 16% for families with children, 19% for children under 18 and 37% for single mothers.

Fifteen percent of the deposit EITC-eligible state taxpayers in 2019.

In Ottawa County, the overall poverty rate is 8%. This rate drops to 7% for families and children under 18, but increases to 28% for single mothers. In 2020, 9.1% of families in Ottawa County benefited from the EITC.

Allegan CountyThe poverty rate is 9%. The poverty rate for families is 10%, while that for children under 18 is 12%. The poverty rate for single mothers in Allegan County climbs to 35%. In 2020, 11.7% families in Allegan County have benefited from the EITC.

Groups argue that increasing the state's EITC would allow families to pay for necessities such as child care.

For single parents in Michigan, the EITC income threshold in 2021 was $42,158 with one eligible child, $47,915 with two eligible children, or $51,464 for three eligible children. These numbers increase to $48,108, $53,865 and $57,414 for married couples filing jointly.

“This state and local data illustrates the ongoing challenges Michigan children and their parents face — and increasing the state’s EITC remains one of the best ways for policymakers to help improve that in their district and throughout Michigan,” said Monique Stanton, president and CEO of the Michigan League for Public Policy.

— Contact journalist Mitchell Boatman at [email protected]. Follow him on Twitter @SentinelMitch.