LANSING, Mich. (AP) — Lansing taxi driver and single father Terry Beasley uses the federal and state earned-income tax credit to supplement the $12,000 he brings home every year, pay off bills and buy new clothes for his son.
"It's going to mean I'm going to have a whole lot less money and be a lot poorer," he said.
About 800,000 low-income Michigan families, who qualify for the state's earned income tax credit like Beasley, will bring home less money this year due to a reduction in the state's earned-income tax credit to 6 percent from 20 percent of the similar federal credit, part of sweeping tax changes Republican Gov. Rick Snyder signed in 2011.
Democratic lawmakers in the Republican-led Michigan House and Senate have introduced bills that would restore the state's refundable tax break for low-income workers to 20 percent. They say the tax break helps low-income working families cope, but Republicans say Democrats lack a plan to pay for the increase, which would cost the state about $252 million a year.
Rep. Tim Greimel of Auburn Hills, leader of the Democratic caucus, said his party may have leverage to increase the credit this year because Snyder may need their support to pass plans that include increasing funding for early childhood education and expanding Medicaid under the Affordable Care Act.
The federal government has offered the tax break for low- and-moderate income individuals and families for more than 30 years as an incentive to work. Michigan and 22 other states offer a similar credit on top of that.
But the tax break in Michigan was lowered in 2011 from 20 percent to 6 percent of what the federal government offers to help reduce the state's billion dollar deficit.
Snyder spokesman Kurt Weiss said in an e-mail that the governor supports the 6 percent credit, "even though more than half of the states across the nation offer no state EITC." He said there are other ways the administration is working to support low and middle income families, including the Medicaid expansion and Healthy Kids Dental, which provides dental coverage for low-income children.