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Low-Income Michiganders Start Feeling Pinch of Higher Taxes, Lower EITC

PHOTO: Low-income families could be the hardest hit by new tax changes, with the elimination of the Child Tax Credit and a reduction in the Earned Income Tax Credit.
PHOTO: Low-income families could be the hardest hit by new tax changes, with the elimination of the Child Tax Credit and a reduction in the Earned Income Tax Credit.
February 22, 2013

LANSING, Mich. – As tax day approaches, more Michigan residents are getting hit by sticker shock caused by fewer tax deductions and credits. The changes were part of a deal hammered out last year that gave Michigan businesses a $1.6 billion break.

Low-income families could be the hardest hit, with the elimination of the child tax deduction, and a reduction in the Earned Income Tax Credit, or EITC.

Karen Holcomb-Merrill is the policy director at the Michigan League for Public Policy. She says the average low-income family could lose about $300 dollars as a result of the cut to the EITC.

"Not only does it hurt that working family that was relying on that money to perhaps to get their car fixed or get caught up on rent, or to get caught up on utility bills,” she says. “But it also harms our local communities and businesses as well."

Holcomb-Merrill says that's because people with low incomes tend to spend their money within their communities.

The League for Public Policy has released a guide to the 2012 tax credits online at mlpp.org.

Holcomb-Merrill says the cuts will have a direct impact on local businesses.

"Because we know when low-income working families receive that money, they don't save it, they can't afford to save it, they spend it right away,” she explains. “So, with the reduced amount going into the pockets of these families, it’s less money going into our local communities."

She says she hopes legislators will restore the EITC for the 2013 tax year.


Rob South, Public News Service - MI