Example Op/Ed
http://www.freep.com/article/20110210/OPINION05/102100411/Opposing-points-view-Michigan-s-Earned-Income-Tax-Credit-raises-families-out-poverty
Opposing points of view: Michigan's Earned Income Tax Credit raises families out of poverty
by Charles Ballard, Stacy Dickert-Conlin and Paul Menchik
February 2011
The State of Michigan faces a budget shortfall for the fiscal year that begins in October. Some members of the Legislature have suggested that the Earned Income Tax Credit should be eliminated as part of the budget fix.
Of all the things we might do to balance the budget, eliminating the Earned Income Tax Credit is one of the worst.
Some opposition to the EITC is due to a misunderstanding of how the program works. The EITC has erroneously been called a "welfare giveaway." In fact, the EITC is not an old-style welfare program. The EITC does not provide any payments to those who don't work.
The EITC supplements the income of low-income working families. If you don't work, you don't get any EITC. It is designed to make work pay, by supplementing wages and offsetting the taxes paid by low-income workers. Economic research has shown that the EITC increases workforce participation among low-income workers.
The EITC began as a federal program. President Gerald Ford signed the EITC into law in 1975. The EITC was expanded in 1986 during the administration of President Ronald Reagan. Reagan called the EITC "the best anti-poverty, the best pro-family, the best job-creation measure to come out of Congress." President George H.W. Bush signed into law a further expansion of the EITC in 1990.
Wisconsin established an EITC to supplement the federal EITC in 1989. Minnesota did the same in 1991, followed by Illinois in 2000 and Michigan in 2006. By 2008, the federal EITC was being supplemented in 24 states and the District of Columbia.
Most of the benefits of the EITC go to families with children. The largest possible amount of Michigan EITC would go to a married couple with three or more children. To qualify for the maximum EITC, this family's income must be below $21,500. The Michigan EITC for a family like this is $1,133.20 per year. Low-income workers without children can also qualify for the EITC, but the maximum amount of Michigan EITC for a childless worker is only $91.40 per year.
The EITC is more important than ever, because of the trends in the distribution of income. Since the 1970s, the standard of living has improved dramatically for business executives, top athletes, entertainers, and highly educated workers. But the last 35 years have not been kind to those below the median income.
If we adjust for inflation, the bottom half of Michigan households have seen very little income growth, if any, since the 1970s. The recession has been especially devastating for many low-income Michigan residents. Why would the State of Michigan choose to kick them when they are down?
For the U.S. as a whole in 2009, the EITC lifted an estimated 6.6 million people out of poverty, including 3.3 million children. The EITC lifts more children out of poverty than any other single program.
Many of the people who take care of our children at day care centers are eligible for the EITC. The same is true for many of the folks who take care of our parents and grandparents at assisted-living facilities. The EITC goes to the janitors who clean our office buildings, and to the workers who clean our homes, and to the kitchen workers who prepare our food. The EITC money doesn't go to frills. It helps people to pay down bills, and pay for groceries, utilities and gasoline.
We should not balance the budget on the backs of low-income working families. We should maintain the Earned Income Tax Credit.
Charles Ballard, Stacy Dickert-Conlin and Paul Menchik are professors in the Department of Economics at Michigan State University.