The Michigan Earned Income Tax Credit (MEITC) was designed and implemented in 2006 as an additional tax credit for those families in Michigan that qualify for the federal Earned Income Tax Credit (EITC).
The EITC is a refundable tax credit which is used to encourage low-income workers towards employment. It offsets the burden of the payroll taxes that employees pay. The MEITC was created to provide a credit built on the federal EITC.In 2006, when the MEITC was introduced, it allowed eligible workers to claim 10% of the existing federal credit on the previous year's state taxes. In 2009, it was supposed to increase, where each eligible worker would receive10% on the current year's state taxes as well. This is where we are running into current problems. .
The increase is estimated at $293 million going to low-income families. Because the state budget is in such a deficit, Governor Granholm along with many legislators believe that the 10% claim intended for the MEITC should be used elsewhere to make up for the money deficit.
House Bill 5480, introduced by Rep. Haverman in September of 2009 [http://www.legislature.mi.gov/documents/2009-2010/billintroduced/House/pdf/2009-HIB-5480.pdf] is a piece of legislation designed to eliminate the increase of the EITC for 2009. This would keep the EITC money at only 10%, and then free up approximately $293 million that many legislators hope to use elsewhere.
Governor Granholm has proposed using these extra funds to re-implement the Michigan Promise Scholarship, which the legislature eliminated in budget plans for FY 10. She has visited numerous college campuses in an attempt to get students to write and call their legislators demanding their scholarships.
The Michigan Catholic Conference, which is the public policy voice of Michigan's Catholic Church, is fighting to protect the promised EITC increase. Paula Long, the VP Public Policy for the MI Catholic Conference when asked about HB5480 stated that "While the move might save the Legislature money on its ledgers, it wouldn't pay off for Michigan in the long run...[the EITC] encourages work and self-sufficiency and has lifted a substantial number of children out of poverty...State policy that grants preferential options to the poor and vulnerable must be given priority over partisan political maneuvering and Band-Aid approaches to the state's budgeting problems". [http://www.micatholicconference.org/pdf/updates/20091201-DetNewsEITC.pdf]
Whether the resolved outcome gives college students their promised scholarship money back, goes to fix the budget deficit, or its used to fulfill its original purpose in assisting low income families; we as Michigan citizens can be expected to be affected.