Michigan Tax Policy Slams the Poor

Michigan is one of only ten states that taxes families living in deep poverty. While its standing should improve next year when the Earned Income Tax Credit goes into effect, there are still additional steps that could be taken to ease the burden on the poor.

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Late last month, the Michigan League for Human Services highlighted a recent report that shows that Michigan’s tax policy is unnecessarily harsh on the poor.

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.

Author: mediamouse

Grand Rapids independent media // mediamouse.org