When Michigan lawmakers adjourned this week, they left several priorities on the table. This includes extending the earned income tax credit.
The federal credit provides a discount depending on the level of income and the number of dependents.
Michigan offers its own version, using a percentage of that amount. Supporters want to see it grow.
Senator-elect Sam Singh (D-East Lansing) will serve as floor leader for the next term. He said that the implementation of this is still a priority.
“Many of our candidates have run on this type of tax relief, especially for those in working class families. And so, I believe that as part of the budget conversation when we go into next year’s budget, we will talk about providing tax relief, through the EITC,” Singh said.
Qualifying Michigan residents can claim a 6% federal tax credit on their taxes. This number was previously 20%, but was increased due to the tax cuts passed in 2011 under the administration of Gov. Rick Snyder.
During the current legislative session, the deputies tried to find a consensus to raise the percentage. The idea has received bipartisan support.
“One of the things that really gives us the opportunity to help those who are working but struggling to make ends meet. And that’s why I think it’s a good use of taxpayer dollars,” Singh said.
Legislators passed a tax plan that reinstated the tax credit this year. But the Republican leadership of the legislature has combined it with the general tax cuts that the Democrats have done.
Gov. Gretchen Whitmer vetoed the legislation.
The Whitmer-backed tax plan should have an easier time getting through the legislature this year when his own Democratic Party is in control of the state House and Senate.
But not everyone sees the tax credit as something lawmakers should spend a lot of time expanding.
James Hohmann is the director of fiscal policy at the Mackinac Center for Public Policy. He said that increasing credit will not make much difference when it comes to goals such as poverty reduction.
“It is not specifically targeted at low-income households, although it is more targeted at low-income households than many other programs. And I really don’t think lawmakers should be interested in increasing it because they think it’s going to improve the economy,” Hohmann said.
Hohmann said the state should instead focus on cleaning up its social network programs to provide better services. He found that the government is too cold when it comes to poverty alleviation.
“We can do it all better,” Hohmann said. “When we look at the next time we try to increase the generosity of our aid programs, we should look at strengthening our aid, making it smarter and more efficient, measuring our results and trying to ensure the our system. working as it should.”
It can take a lot of willpower and responsibility. Hohmann agreed that political will is now behind the credit expansion.
Singh also highlighted the partnership behind it that came to support the expansion during the committee process.
“The reality is that these business groups that saw the tax cuts are now scrambling to get them back,” he said. “It’s not just the Democrats who are going to continue to push for it, you have a diverse coalition.”
Singh said re-evaluation to ensure that the state is providing adequate social networks to the needy is part of his plans for the coming year.