Reps. Cochran, Pagan, Rabhi Propose Tax Relief for Families

Plan to revitalize EITC would bolster income of Michigan families
Wednesday, March 8, 2017

LANSING — State Reps. Tom Cochran (D-Mason) and Kristy Pagan (D-Canton) introduced legislation today to financially strengthen working families in Michigan by revitalizing the Earned Income Tax Credit. The EITC is a refundable tax credit available to low- and middle-income individuals to offset taxes that are paid on wages. Cochran’s bill would restore the state ETIC to 20 percent of the federal level, and Pagan’s bill would raise it to 25 percent. State Rep. Yousef Rabhi (D-Ann Arbor) joins Cochran and Pagan in calling for tax credits for hardworking Michigan residents who struggle to make ends meet and is the lead co-sponsor of both bills.

“Michigan families work tirelessly for their paychecks, and they need relief when tax season comes,” Cochran said. “The Earned Income Tax Credit lets families keep more of their hard-earned dollars, so that they can buy things like clothes, groceries and appliances from local shops. Expanding the Earned Income Tax Credit is good for working people and good for Michigan’s economy.”

In 2011, legislative Republicans drastically changed Michigan’s tax structure, cutting taxes on corporations by about $2 billion a year and cutting or eliminating many credits and deductions that benefit working families. In particular, the EITC was reduced from 20 percent of the federal level to 6 percent. Every year following, this reduction has continued to harm hundreds of thousands of working families in Michigan who are struggling to stay afloat.

 “We can’t continue to balance the state budget on the backs of people who work hard day in and day out just to put food on the table,” Pagan said. “No one who works for a living, especially those working two or three jobs, should live in poverty. The Republican Majority continues to think up tax reforms that only help those at the top while leaving the rest of us behind. Restoring and raising the EITC will help families become self-reliant and self-sustaining, all while stimulating Michigan’s economy.”

Instead of an across-the-board tax cut — two-thirds of which would go to the richest 20 percent of taxpayers — that would result in a $1 billion budget shortfall, House Democrats support targeted tax relief for the working men and women who need it most. Instead of saving about $3.75 a month under the Republican plan, working families would get back about $50 a month with an increased EITC. Families could then spend that money in the local economy, supporting small businesses and driving the demand that fuels job creation.

“There is no denying the significant benefits the EITC provides for working families across our state,” Rabhi said. “At its former level, this tax credit lifted tens of thousands of families out of poverty every year, allowing them to put the money they saved back into the economy to fuel its growth. If Republicans truly want the economy to thrive, then they should agree to provide real tax relief for the hardworking men and women across our state, rather than tax cuts for corporations and wealthy donors.”