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New effort to expand MI low-income tax credit introduced in Lansing

state capitol building in lansing, michigan at night
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A bill to expand the Michigan earned income tax credit has been re-introduced in the Legislature. The bill would ensure a delayed tax break for lower income workers can take effect in this tax year.

Senator Kristen McDonald Rivet (D-Bay City) is the bill sponsor. She said boosting the EITC has wide support — both Democrats and Republicans voted for a bill this year to expand the state credit to 30 percent of the federal credit. That bill is sitting on Governor Gretchen Whitmer’s desk.

But the EITC expansion became entangled in a partisan fight over sending taxpayers $180 rebate checks versus allowing the state income tax rate to drop. Republicans refused to support the bill because it might jeopardize an automatic rollback in the income tax rate that’s based on state revenue levels. So the bill was sent to Whitmer without a critical procedural measure that requires supermajority votes for the bill to take effect right away.

“And what that will result in is the tax relief for working families will not get cash in people’s pockets until this time next year or even potentially next summer,” said McDonald Rivet.

McDonald Rivet said her bill would separate those other controversies from the EITC.

“My bill would run it all on its own so that we can get help to families right now,” she said. “This is basically, let’s just do the relief right now, not wait until next year.” She said the bill could be on Whitmer’s desk by early April.

The Michigan League for Public Policy estimates the EITC expansion would benefit hundreds of thousands of low-income households. The increase would bring the credit to an average of $750 per family.

In 2011, the Michigan EITC was rolled back from 20% of the federal earned income credit to 6 percent as part of a GOP-engineered plan to reduce businesses taxes.

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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