Scrooge and the MI Budget - Lessenberry on the Earned Income Tax Credit (EITC)

[Bozita]

http://news.michiganradio.org/post/scrooge-and-budget

12:46PM
Thu April 21, 2011

Scrooge and the Budget
By Jack Lessenberry


What if the governor increased the amount of Michigan income tax I had to pay by ten dollars a week? The truth is, I’d barely miss it, and if I went out to eat a little less often, I wouldn’t miss it at all.

I’m not anything close to rich, but fortunately, I manage to make an income adequate for my family’s needs, and don’t have any children who need to go to camp or college.

However, let’s say I was a widower, had two little kids, and was just scraping along as a freelance writer, making fifteen thousand a year. I actually know people like that. In that case, would a tax increase of more than five hundred a year matter?

Frankly, it would be devastating. I cannot imagine making it with two kids on that tiny income, and losing that big a chunk might well topple us off the financial cliff. Yet that is precisely what the governor is proposing to do. He wants to eliminate the Earned Income Tax Credit, which provides a tax refund to the working poor.

These aren’t idle people or welfare chiselers, but people who work but don’t make much money. Economists have told me that this tax credit makes a great deal of sense for a number of reasons. It enables families to stay together and keep their heads above water.

It stimulates the local economy as few other credits do, because those getting the refund tend to spend it almost immediately, and locally. They buy food and school supplies with it, or pay the electric and gas bills. Last year, the average family getting such a tax credit got an average refund of $432 dollars.

Well, there’s no need to guess how essential this was. We are about to find out what life is like without it.

more...

[Bozita]

1. kick