Michigan Republicans — May 14, 2015 at 7:28 am

Republicans decide working poor Michiganders haven’t been screwed enough, want to eliminate EITC to pay for roads


Given their history, it takes a lot for Michigan Republicans to do something so cruel, so heartless, so Henry F. Potterish that it surprises you. But I am confident in saying that their most recent gambit to find funding for road repairs in our state rises to that level. In an effort to race $1 billion to put toward roads, House Republicans are proposing an elimination of the Earned Income Tax Credit, virtually the only tax credit available to poor people and which helps the working poor, folks holding down a full-time job but still struggling to make ends meet. Keep in mind, the EITC would have been restored from 6% to 20% if Prop 1 had passed. With its defeat, they now want to do away with it entirely.

The rest of the funding comes largely from wishful thinking and prayerful hopes:

The House plan is premised on:

  • $700 million phased in over the next four years that will be budgeted, in part from extra revenues that are expected in both the upcoming Revenue Estimating Conference on Friday and future growth in the state economy.
  • $162 million from eliminating the Earned Income Tax Credit for the working poor, which would generate $117 million; and $45 million in additional revenues from making the tax on diesel fuel equal to the tax on regular fuel; and instituting user fees for people who drive hybrid or plug-in electric cars.
  • $185 million through a $75 million raid of the 21st Century Jobs Fund and $60 million in revenues from the tribal gaming casinos, which now go into economic development, and shifting $50 million in film subsidies to roads.

So, 70% of the money only materializes if the economy continues to improve, something not guaranteed given that our infrastructure is crumbling. And the rest comes largely from screwing over the poor and robbing funds dedicated toward investing in growing the economy by putting people to work. It’s so genius you wonder why they put us through the pain and agony of Prop 1 in the first place.

The Michigan League for Public Policy was straightforward in their condemnation of the plan. Via their Vice President Karen Holcomb-Merrill:

This proposal is our greatest fear: it eliminates one of the few tax credits helping to bring low-wage workers out of poverty and paves the roads on the backs of our most vulnerable people.

Eliminating the Earned Income Tax Credit is the wrong direction. Because of the regressive nature of sales taxes, we fought hard for Proposal 1 to restore the EITC from the current 6 percent to 20 percent. It would have protected the lowest earners, those making less than $20,000 a year, from the increased sales and gas taxes and registration fee changes. For a single mom supporting two kids on a full-time minimum wage job, that would have meant an extra $608 to buy food and pay bills, or maybe get ahead a little for once.

The need remains and must be a priority for our Legislature. It certainly should not be eliminated. Too many workers earning low wages depend on this to give them a little boost in their meager earnings.

We remain hopeful that Senate Republicans will have a better proposal.

Democratic House Leader Tim Greimel was equally blunt:

Relying on imagined future revenue growth is not a long-term solution that will take us into the future with a solid financial plan to fix and maintain our roads. Raising taxes on working families by eliminating the Earned Income Tax Credit, while not asking corporations who’ve seen billions of dollars in tax cuts to make a contribution, is a slap in the face to Michigan residents.

But, hey, at least they aren’t raising taxes! The only surprising thing is that they didn’t propose slashing education. Of course the Senate Republicans haven’t taken their swing at this yet. So there’s still time.