UWBCKR Joins Call to Increase Earned Income Tax Credit

United Way joined organizations from across Kalamazoo County urging state legislators to support Michigan Gov. Gretchen Whitmer’s proposal to double Michigan’s Earned Income Tax Credit, an important support for low-income families.

The coalition called on lawmakers to show bipartisan support for the proposal to double the EITC from 6% to 12%, which according to a recent Michigan State University study would increase the average Kalamazoo County filer’s refund by more than $130.

“Here at the United Way of the Battle Creek and Kalamazoo Region, we are committed to advancing good health, quality education and economic prosperity for everyone in our community,” said Dr. Nakia Baylis, Community Impact Associate for the United Way of the Battle Creek and Kalamazoo Region. “We know from our experience working in the community the EITC is among the most effective and efficient policies available to low-to-moderately low-income workers and their families. In fact, in 2017 the Michigan EITC helped more than 17,000 families in Kalamazoo County put food on the table, fix their cars and pay their utility bills.”

The Federal EITC provides relief for low-to-moderately low-income working individuals in the form of a credit on their tax returns. In 2006, Michigan lawmakers passed a law that provided qualified filers 20% of their federal EITC on their state income taxes. That amount was reduced to 6% through legislation that took effect under former Gov. Rick Snyder in 2011. Gov. Whitmer has proposed doubling the Michigan EITC to 12% in her 2020 budget.

“Earlier this year, I co-authored a paper with two researchers titled: Longer-run effects of antipoverty policies on disadvantaged neighborhoods,” said Dr. Brian Asquith, an applied microeconomist from the W.E. Upjohn Institute for Employment Research. “Much like the research conducted by Michigan State University, we found the long-run effects of the Earned Income Tax Credit is to increase employment and reduce poverty and reliance on public assistance. In fact, MSU’s research found that doubling the EITC would spark job creation in rural communities and create nearly 700 jobs.”

A common misconception is the EITC only impacts urban communities. However, the recent Michigan State University study found increasing the Michigan EITC to 12% would increase the average filer’s tax refund by more than $130. In addition, the study found an increase to the EITC would have a significant positive impact on rural communities across the state due to increased spending and economic activity. According to the study, the increase would have an economic impact of more than $92 million.

“The benefits of Michigan’s EITC touch every corner of the state, and as director of Volunteer Income Tax Assistance Services I get an up-close look at the impact it has on families in our community,” said Eric Stewart, director of Kalamazoo RESA’s Youth Opportunities Unlimited. “The Earned Income Tax Credit is a powerful and effective policy that helps many low-to-moderately low-income working families in our community put food on their table, fix their cars and pay their utility bills. Doubling the EITC from 6% to 12% will have a significant positive impact on our economy by boosting spending at local businesses.”