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House votes for dramatic increase in taxes on low income families, more child poverty, and reduced education opportunities

April 28, 2011

Today’s vote by the House of Representatives to dramatically reduce a crucial tax credit for working poor families in Michigan would result in thousands more children in poverty  and contradicts Gov. Rick Snyder’s stated goals of reducing child poverty and increasing young children’s readiness for school.

The plan would all but eliminate the Michigan Earned Income Tax Credit – enacted on a nearly unanimous bipartisan vote in 2006 – and the $600 per child income tax deduction, replacing them with a $25 per child credit that does virtually nothing to protect low-earning families from poverty. It shifts responsibility for millions of dollars in taxes to the working poor. The plan would raise the income tax payment for a single parent earning $25,000 with two children by 89 percent.

The Michigan League for Human Services and other supporters of the EITC urged the Senate to restore the credit.

“We cannot allow political ideologies to harm the people who most need a compassionate Legislature,’’ said League President & CEO Gilda Z. Jacobs. “The EITC is a time-tested, bipartisan policy, and its elimination will raise taxes on the poorest working families and drive thousands of kids into poverty.”

The League is offering a plan to preserve the EITC at a lower level than current policy with no additional dollars by redirecting a portion of the funds for the Homestead Property Tax Credit designated for low-income families and the $25 per child credit.

“These meager tax credits don’t really help the poorest of the working poor and the children that we are trying to help. Our alternative is a fairer, less harmful approach,’’ Jacobs said.

The vote also contradicts the Wednesday call from Gov. Rick Snyder for a P-20 (prenatal care through college) education system.

“We know that many children are not ready for kindergarten because of the byproducts of poverty, including inadequate medical care, improper nourishment, stress, and limited access to high quality child care and early learning programs that help to counteract poverty’s negative effects. We also know that those children who spend more than two years below the poverty line are far more likely to fail to get even a high school diploma. These cuts to the state EITC will compromise the Governor’s efforts to dramatically improve our children’s readiness for school and later academic success,” said Jack Kresnak, president and CEO of Michigan’s Children.

Jane Zehnder-Merrell, director of the Kids Count in Michigan project at the League, noted:

“Gov. Snyder’s education address notes that, ‘on average, only 65 percent of children entered kindergarten classrooms this year ready to learn the curriculum.’ Yet, one of his first acts has been to eliminate the state EITC and push 14,000 children into poverty – where their chances of being ready for school are greatly diminished.”

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