According to the report, Michigan is one of only ten states that taxes families living in deep poverty. It is one of nine states to tax a two-parent family of four earning less than three-quarters of the poverty line ($15,902), and one of just six to tax a single-parent family with two children earning less than three-quarters of the poverty line ($12,398).
Michigan’s ranking should improve next year, as the Michigan Earned Income Tax Credit (EITC) will be available to Michigan families. However, the EITC has already been under attack when legislation was introduced to freeze the EITC because of shortfall in state revenues. The EITC is 10% of the existing federal EITC credit in 2008 and rises to 20% in 2009.
The Michigan League for Human Services has called for an expansion of the Michigan EITC to 25% of the federal EITC as well as a switch to a graduated income tax.
Michigan is one of only seven states with a flat income tax where everyone pays the same rate regardless of their earnings.