Poor families and children are being victimized by Michigan state government
By Rob South | rsouth@mlive.com
February 02, 2012
LANSING – As tax season starts in full swing, a new report says low income families will be hardest hit by a state tax reform package passed last year.
While the changes don’t take effect until the 2012 tax year, the Michigan League for Human Services hopes some credits helpful to the poor can be restored by then, particularly the $600 per-child tax deduction.
The League released a report that says the tax plan will hit poor families 1,000 times harder than wealthy households. (To read full report, click on TaxChangesHitLowIncomeFamiliestheHardest[1].)
Families making less than $17,000 a year would pay one percent more in taxes in 2012, while families making more than $334,000 would see their taxes go up by only .001 percent, the report states.
Gilda Jacobs, president of Michigan League for Human Services
Gilda Jacobs, president and CEO of the League, wants to see a fair tax structure that doesn’t hit the poor harder than the wealthy.
“We want to be sure that we have shared sacrifice.” she says. “If you’re making $17,000 a year, this is going cost you about $100. That’s a lot of money to these people. That’s a car payment, that’s a winter utility bill. It’s huge.”
State Rep. Jud Gilbert, R- Algonac, chair of the House Tax Committee, says the bills were part of a larger package aimed at streamlining the tax code. He says about $1.4 billion in tax credits, including tax credits to businesses, were eliminated. The package also reduced the Earned Income Tax Credit – another credit for the poor – from 20 percent to 6 percent of the federal credit.
Gov. Snyder signs tax reform legislation into law. Pictured (from left) are: Lt. Gov. Brian Calley; Rep. Jud Gilbert, R-Algonac; Speaker of the House Jase Bolger, R-Marshall; Snyder; Senate Majority Leader Randy Richardville, R-Monroe; and Sens. Mark Jansen, R-Gaines Twp.; Darwin Booher, R-Evart; Arlan Meekhof, R-West Olive Twp.; and Mike Kowall, R-White Lake. (5/25/2011)
“I think what we’ve done in the revamping of the tax code,” says Gilbert,” is people are paying the same rate on the same amount of income. “
Jacobs points out that the package also included $1.6 billion in tax cuts to businesses. She says when the changes are fully implemented next year, business tax revenues would be cut 83 percent and individual income taxes would go up 23 percent.
The report offers four recommendations to restore equity to the tax structure:
• Implement a graduated income tax
• Extend the sales tax to include services
• Create a low-income sales tax credit to offset new sales taxes
• Restore the Earned Income Tax Credit (IETC) to 20 percent.
http://www.mlive.com/politics/index.ssf/2012/02/michigans_poorest_families_hit.html
Website for the Michigan League for Human Services is at http://www.milhs.org. Also go to http://saveoureitc.com/, a website campaigning to save the earned income tax credit.
