Michigan Working Poor May Receive $25 Child Tax Credit Instead of $400 Earned Income Tax Credit

An update on plans to eliminate the earned income tax credit:

Low-income wage earners who would lose existing Michigan tax credits that average $425 a year scrapped in Gov. Rick Snyder’s business tax overhaul would pick up a new $25 per child tax credit in a compromise version.

Lt. Gov. Brian Calley told the House Tax Policy Committee that the administration supports the change. Coupled with expanded credits for rent and property tax payments, low-income residents would receive more than $100 million in tax benefits.

That’s less than a third of $350 million the Michigan Earned Income Tax credit currently provides. It’s proposed elimination by Snyder has received perhaps the most criticism. Advocates call it a tax increase on the working poor that will push more Michigan children into poverty.

Rep. Jud Gilbert, R-Algonac, chairman of the committee that could report the tax package out as early as next week, was an early proponent of the MEITC and suggested the $25 credit as an alternative.

Still, the amount doesn’t come close to matching the benefit of the MEITC. It equals the tax benefit of the current $600 per-child tax deduction, a break that Snyder’s plan also eliminates.

www.mlive.com/politics/index.ssf/2011/04/michigan_working_poor_would_re.html