The Michigan Catholic Conference (MCC) commissioned Anderson Economic Group (AEG) to update our 2002 report A Hand Up for Michigan Workers: Creating a State Earned Income Tax Credit. The MCC commissioned the original report to provide policymakers with the necessary data and analysis to make a decision regarding the creation of a Michigan Earned Income Tax Credit (MEITC). The MCC supported the passage of a state EITC and has advocated for the refundable tax credit as a way to help families work their way out of poverty.
Since the release of the original report, the Michigan Legislature passed and Governor Jennifer Granholm signed into law the MEITC. The credit will go into effect beginning in tax year 2008. In this report we explain how the MEITC will work, the rationale for having a state EITC, and estimate the likely cost of the MEITC to the state using information not available in 2002.