LANSING — The House Democratic Caucus came out in opposition of Speaker Kevin Cotter’s road funding plan today. Among other things, the House Republican plan would eliminate the Earned Income Tax Credit, a credit that many low-income working families rely on to make ends meet.
“When Prop 1 failed in early May, it was a signal from our voters that they want us to come up with a comprehensive road funding solution without putting more burdens on the backs of everyday Michiganders,” House Democratic Leader Tim Greimel (D-Auburn Hills) said. “Unfortunately, the plan being pushed through the House this week is one that places an unfair burden on working families, many of whom are already struggling from tax increases passed by Republicans during the past four years.”
The EITC was drastically cut once before, in 2011, when Gov. Rick Snyder took office along with a number of Republicans in the House and Senate. This caused a $285 million tax hike on our lowest earners, according to numbers from the Michigan League for Public Policy. To eliminate the EITC completely would raise taxes once again on 820,000 low-income working families. Furthermore, the $117 million saved by eliminating the credit would be a drop in the bucket of the more than $1 billion needed for road funding.
“Speaker Cotter and his fellow Republicans in the House call this a road funding plan, but it’s not even worth calling it serious,” said state Representative Marilyn Lane (D-Fraser), minority vice chair of the House Transportation and Infrastructure committee. “If anything, this is a smoke and mirrors tactic that will hurt many of Michigan’s residents while still failing to come up with the needed amount to fix our crumbling roads. We should be working on a comprehensive solution that is guaranteed to work, not wasting time on a flimsy plan that relies on hope and prayer to work.”
Eliminating the EITC is designed to offset a portion of the $900 million diverted from the State’s General Fund in the plan. However, those dollars are based on projected growth, not actual dollars currently available. The plan also diverts funding from the 21st Century Jobs Fund, which is the source for the highly successful Pure Michigan travel promotion efforts.
“To ask us to hope for growth in the General Fund to find this money while we continue to put an increasing strain on the General Fund budget is not going to work, plain and simple,” said state Representative Sheldon Neeley (D-Flint), a member of the House Transportation and Infrastructure committee. “It’s sad that we have to take money from a budget that helps support education, health care and public safety for a plan that isn’t even guaranteed to succeed. We need a real solution for our road funding, not a Band-Aid that’s ready to fall off at any moment.”
“Roads need fixing, but it shouldn’t be done at the expense of the working, low-income taxpayers with the least ability to pay,” added Marshall J. Hunt, Director of Tax Policy and Advocacy for the Accounting Aid Society. “The EITC is extremely important to lower-income taxpayers who are working. At six percent of the federal EITC, the amount of the Michigan EITC might not seem large to some, but it can provide the needed dollars to repair a car needed to get to work, pay a utility bill, or help with educational expenses or other necessities.”