Advocacy News – Aug. 31, 2022
As Michigan heads into fall and the start of a new state budget year Oct. 1, questions loom large around what to do with the state’s unprecedented $7 billion left on the books (about half is one-time federal stimulus dollars). Will the legislature and governor come to an agreement on a cut in the personal and/or corporate income tax rate? Relief at the gas pump? A reduction in the retirement tax? An increase in the Earned Income Tax Credit (EITC)?
Of all the options, investing in the EITC, a refundable tax credit for low or moderate-income workers, has garnered broad bipartisan support, including the Michigan Chamber. Here’s why:
What is the EITC? And how does it work?
First established in 2006, it is modeled after the federal EITC. The specific Michigan EITC amount has fluctuated over the years since then from 20% to its current 6%, depending on policymaker negotiations and state budgets at the time.
There are ongoing conversations now regarding what the best, sustainable amount could or should be moving forward. The Chamber has not identified or advocated a specific amount.
The Chamber believes that the EITC provides the chance to bring unlikely allies together and forge a bipartisan solution in times when that kind of consensus can be hard to achieve.
An increase in the EITC would benefit workers and businesses alike. For workers, it has a history of pulling people into the workforce and helping struggling families pay for necessities, especially now with historic inflation. And for employers, it helps provide an important incentive to work, all the more critical in today’s continuing talent shortage felt in every industry across the state, from Houghton to Holland to Highland Park and between. That also boosts our local economies and communities.
The Michigan Chamber encourages legislators and the governor to continue having these EITC discussions and staying focused on pragmatic public policy that can benefit all.
For questions or more information, please contact Leah Robinson, director of legislative affairs and leadership programming, at lrobinson@michamber.com.