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Low-income tax credit eyed for road funding

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A state House panel is eyeing the elimination of a tax credit for working poor families to help come up with more money for roads.

Representative Jeff Farrington, R-Utica, chairs the House Roads and Economic Development Committee. He says eliminating the state’s earned income tax credit would add about $120 million for road funding.

At the same time, he says, it does not do very much to help working poor families.

“In Michigan, the average payout last year was $143 from the EITC, the Michigan portion of it,” he says. “That’s $2.37 per week.”

Supporters of the tax credit say that refund may not seem like much, but it allows low-income households to do things like deal with an unpaid bill, buy school clothes, or a pay for a car repair.

“Eliminating the Michigan Earned Income Tax Credit would be a tax hike on 820,000 working families who are raising 1 million – 1 million children here in Michigan,” says Gilda Jacobs, president of the Michigan League for Public Policy. “What it will do is basically increase poverty for thousands of Michiganders, which is a legacy that no one should aspire to.”

Governor Rick Snyder cut the state EITC from 20% of the federal credit to 6% in his 2011 budget proposal. Democrats cut a deal last year to make restoring the credit to 20% part of the Proposal 1 ballot proposal that was rejected by voters last month. 

Rick Pluta is Senior Capitol Correspondent for the Michigan Public Radio Network. He has been covering Michigan’s Capitol, government, and politics since 1987.
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